Gilk et al v. Fisher et al

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
John P. Golbranson, John J. Steffenhagen, Terrance W. Moore, and Thomas
Priebe, HELLMUTH & JOHNSON, PLLC, 8050 West Seventy-Eighth Street,
Edina, MN 55439, for Plaintiffs.
Matthew T. Collins and Nicholas M. Lewis, FABYANSKE, WESTRA, HART &
THOMSON, PA, 80 South Eighth Street, Suite 1900, Minneapolis, MN 55402;
for Defendants Mark L. Fisher, Errol Galt, and Mark Baker; and Elena
Senftner, FABYANSKE, WESTRA, HART & THOMSON, PA, 80 South Eighth
Street, 	Suite 	1900, 	Minneapolis, 	MN 	55402, 	for 	Defendant 	Axocon
Polymers.
Plaintiffs Daniel Gilk and Samuel Gilk (the “Gilks”) filed this action individually and
on behalf of Fly Boatworks, LLC (“Fly Boatworks,” together with the Gilks, “Plaintiffs”)
claiming, among other things, that Defendants Mark L. Fisher, Errol Galt, Mark Baker, and
DANIEL GILK and SAMUEL GILK, each
individually and derivatively on behalf of
FLY BOATWORKS, LLC,
Plaintiffs,
v.
MARK L. FISHER,
ERROL GALT,
MARK BAKER, and
AXOCON POLYMERS, LLC, formerly known
as TRIDENT POLYMERS, LLC,
Defendants.
Civil No. 25-2158 (JRT/LIB)
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN
PART DEFENDANTS’ MOTION TO
DISMISS
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Axocon Polymers, LLC (collectively, “Defendants”) misappropriated Fly Boatworks’ trade
secrets and usurped Fly Boatworks’ business opportunities. Specifically, the Gilks allege
that Defendants have conspired to oust Fly Boatworks from a lucrative skiff boat contract
with Martac Corp. (“Martac”) by inserting Axocon into that contract. 	Plaintiffs bring
claims against the Defendants for misappropriation of trade secrets, breach of contract,
breach of fiduciary duties, breach of the covenant of good faith and fair dealing, civil
conspiracy, conversion/civil theft, unjust enrichment, accounting, tortious interference
with 	prospective 	economic 	advantage 	and 	contract, 	fraud, 	and 	injunctive 	relief.
Defendants now move to dismiss Plaintiffs’ First Amended Complaint pursuant to Federal
Rules of Civil Procedure 8(a), 9(b), and 12(b)(6). After careful consideration, the Court will
GRANT in part and DENY in part Defendants’ motion to dismiss.
BACKGROUND
I. 	FACTUAL BACKGROUND
The Gilks founded Fly Boatworks in 2012 to build and sell skiffs. (Am. Compl. ¶ 15,
June 10, 2025, Docket No. 40.) Beginning in 2019, the Gilks began working with Fisher to
create a new skiff model, the F2 Carbon. (Id. ¶ 16.) Over the next two years, the Gilks
and Fisher collaborated to develop the F2 Carbon, which included inventing ten primary
components and the F2 Carbon manufacturing molds. (Id. ¶ 18.) In 2021, Fisher, Galt,
and Baker (collectively, “Individual Defendants”) invested along with the Gilks in Fly
Boatworks, 	entering 	into 	the 	Fly 	Boatworks 	Operating 	Agreement 	(“Operating
Agreement”). (Id. ¶ 22.) Under the Operating Agreement, Daniel Gilk, Samuel Gilk, and
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Fisher each owned 22.22% of Fly Boatworks, and Galt and Baker each owned 16.67% of
Fly Boatworks. (Id. ¶ 23.) But the Operating Agreement required all company actions be
approved by a unanimous vote of all owners and imposed a duty of loyalty. (Id. ¶¶ 25–
27.) 	The Gilks were responsible for engineering duties. 	(Id. ¶ 31.) 	Fisher oversaw
development operations, financial management, and sales. 	(Id. ¶ 32.) 	Galt and Baker
acted as silent investors. (Id. ¶ 33.)
The Gilks concede that Fisher contributed to the development of the F2 carbon by
“provid[ing] a broad vision” but maintain that the specific design work was performed by
the Gilks. (Id. ¶ 17.) The Gilks claim to be the primary creators of, among other things,
“the specific design method which allowed the jet pump integration with the hull[,] . . .
the specifically shaped hull and stern design[,] . . . the internally-actuated trim tab design
[, and] . . . the cap (or deck) assembly[.]”1 (Id. ¶ 19 (collectively, the “Skiff Innovations”).)
1 The “Skiff Innovations” include:
(1) the specific design method which allowed the jet pump
integration with the hull. 	The new method made it possible to
utilize previously incompatible off-the-shelf high performance jet
pump components (with a high dead rise, or sharper hull bottom)
with a shallow-water capable hull design (with lower dead rise, or
flatter hull bottom). 	A specific geometry was developed to
transition and combine these elements into a unified, high-
performance system; (2) the specifically shaped hull and stern
design which provides the F2 Carbon's exceptional low speed
maneuverability, 	reverse, 	and 	braking/stopping 	performance.
Obtaining 	performance 	in 	these 	areas 	has 	typically 	been 	a
challenge, and the unique innovation solving this involves a stern
design with a relatively high degree of curvature (approximately 90
degrees) which allows reverse flow from the jet bucket to be, not
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The Gilks further contend that their contributions are what make the F2 Carbon a
“revolutionary product.” (Id. ¶ 20.)
Development of the F2 Carbon continued for several years. By the end of 2022,
the first F2 Carbon prototype had been built and initial testing and marketing began. (Id.
¶ 36.) Over the next two years, the Gilks continued to revise and refine the F2 Carbon.
(Id. ¶ 37.) 	During that time, the Gilks also built and delivered four F2 Carbons to
consumers. (Id. ¶ 38.) Without a third-party means to manufacture the F2 Carbons, the
Gilks built each F2 Carbon in house. (Id.)
In October 2024, Fly Boatworks began negotiating with Martac about a possible
collaboration. (Id. ¶ 40.) Fly Boatworks and Martac worked together to integrate the F2
Carbon components into Martac’s M18.2 (Id. ¶ 43.) The Gilks allege that they developed
and designed all of the new components for the M18. (Id.)
only uninhibited, but actually enhanced via the venturi effect
created through its interaction with the outside stern angles; (3)
the internally-actuated trim tab design; (4) the cap (or deck)
assembly, including unique overall design topology as well as
specially designed multi-drain-angle gutter systems which promote
and 	direct 	progressively 	increasing 	waterflow 	for 	self-bailing
evacuation.
(Am. Compl. ¶ 19; see also Decl. of Daniel Gilk (“D. Gilk Decl.”) ¶¶ 9–10, May 20, 2025,
Docket No. 11.)
2 The products are referred to both as M18 and M19 but are used by the parties
interchangeably. (See Am. Compl. ¶ 47.) For clarity, the Court will exclusively use M18.
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In December 2024, Fisher sent a proposal, on behalf of Fly Boatworks, to Martac
offering to “develop, produce, and deliver the best jet-driven Hyper skiff on the market,
designed to Martac’s specifications.” (Id. ¶¶ 44–45.) The M18 product would integrate
Martac’s unmanned, artificial intelligence, and drone technology and rapidly scale up
production utilizing Martac’s global and military connections. (Id. ¶ 46.) The projected
profit from this partnership was $23 million annually. (Id. ¶ 51.)
The Gilks allege that when the M18 design was finalized to meet Martac’s needs,
the Individual Defendants (Fisher, Galt, and Baker) formed Axocon and began negotiating
with Martac on behalf of Axocon, excluding Fly Boatworks. (Id. ¶¶ 53, 57–58.) The Gilks
allege, however, that Fisher continued to request M18 engineering services from the
Gilks. (Id. ¶ 59.)
The Gilks argue that the Individual Defendants have created several businesses to
carry out this alleged conspiracy. 	Axocon was formed after Fly Boatworks began
negotiations with Martac and is equally owned by all three Individual Defendants. 	(Id.
¶ 60.) Fisher created Marine Aerospace Composites LLC (“MASC”) to allegedly secure the
manufacturing contract with Martac. (Id. ¶ 61; Decl. of Daniel Gilk (“D. Gilk Decl.”) ¶¶ 31–
32, Ex. H, May 20, 2025, Docket No. 11.3) Galt is believed to own Oversight Resources,
3 The parties do not dispute that Daniel Gilks’ Declaration is necessarily embraced by the
First Amended Complaint.
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LLC (“Oversight”), which has received several invoices from MASC related to the
construction of the M18 mold. (Am. Compl. ¶ 62; D. Gilk Decl. ¶ 34.)
The Gilks allege significant clandestine behavior by the Individual Defendants to
steal Fly Boatworks’ opportunities. Fisher allegedly sent many outstanding bills related
to the M18 project to Oversight and described paying those bills out of his own pocket to
“avoid tracking” and has directed payments to personal accounts. (Am. Compl. ¶¶ 63–
64, 83–84.) Fisher has allegedly filed a patent application on behalf of Axocon that names
himself, Galt and Baker as inventors and incorporates the Gilks and Fly Boatworks’
inventions. (Id. ¶¶ 65–70.) The Gilks allege that the Individual Defendants conspired to
put an exclusive contract in place between Axocon and Martac and removing any Fly
Boatworks’ branding. (Id. ¶¶ 89–95, 96–97.) The Gilks further allege that the Individual
Defendants have used Axocon as an alter ego of Fly Boatworks in an attempt to defraud
the Gilks. (Id. ¶¶ 105, 112.)
As part of the overall conspiracy, the Gilks allege that the Individual Defendants’
conduct in early May 2025 was intended to force the dissolution of Fly Boatworks. The
Gilks cite to a draft email sent by Galt to Fisher and Baker, intended to later be sent to the
Gilks, that claims that Fly Boatworks cannot continue operations because it carried too
much debt and thus should be dissolved or that the Operating Agreement should be
amended. (Id. ¶ 74.) Fisher also emailed the Fly Boatworks owners expressing an intent
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to exit Fly Boatworks and requested a buyout. (Id. ¶ 75.) Galt and Baker then called due
Member Loan #4 which the Gilks and Fisher were personally liable for. (Id. ¶¶ 85–88.)
On May 12, 2025, Fisher sent a “Strategic Partnership Proposal” to The Indoor Lab
(“Indoor Lab”) on behalf of Axocon. (Id. ¶ 91). Fisher believed that Axocon and Indoor
Lab’s partnership was essential to securing contracts with the Department of Homeland
Security and Customs and Border Protection and was a prelude to an Axocon–Martac
partnership. (Id. ¶¶ 79–80.) The May 12, 2025 proposal provided that Axocon would be
the exclusive manufacturer for certain vessels and requested that an agreement be made
giving Axocon a right of first refusal to produce any Martac vessels. (Id. ¶ 92.)
On May 14, 2025, Fisher (on behalf of Axocon) accepted an offer from Martac. (Id.
¶ 93.) When Galt and Baker reviewed the draft agreement with Martac, Baker asked why
they were “co-branding the document with Fly [Boatworks].” (Id. ¶ 96.) Fisher agreed
that Fly Boatworks’ brand “need[ed] to be taken off.” (Id.)
Believing that a prototype would be delivered to Martac on May 28, 2025, and a
contract was set to be signed on June 2, 2025 (id. ¶¶ 89, 94), the Gilks initiated this action
individually and on behalf of Fly Boatworks on May 20, 2025 (Docket No. 1).
II. 	PROCEDURAL HISTORY
Plaintiffs bring causes of actions against Defendants for misappropriation of trade
secrets, breach of contract, breach of fiduciary duties, breach of the covenant of good
faith 	and 	fair 	dealing, 	civil 	conspiracy, 	conversion/civil 	theft, 	unjust 	enrichment,
accounting, tortious interference with prospective economic advantage and contract,
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fraud, and injunctive relief. 	(Am. Compl. ¶¶ 118–196.) 	The Gilks sought a temporary
restraining order (TRO) and preliminary injunction. (Pls.’ Mot. for TRO and Prelim. Inj.,
May 20, 2025, Docket No. 8.)
The parties stipulated in part to a TRO on May 29, 2025. 	(Docket No. 20.)
Defendants then responded to the Plaintiffs’ TRO motion and simultaneously filed their
own motion for TRO and preliminary injunction. (Defs.’ Mem. Opp’n Pls.’ Mot. for TRO,
June 3, 2025, Docket No. 22; Defs.’ Mot. for TRO and Prelim. Inj., June 3, 2025, Docket No.
26.) While the Court was considering the parties’ TRO motions, Plaintiffs amended their
complaint (Am. Compl., June 10, 2025, Docket No. 40), and Defendants subsequently
moved the Court to dismiss the First Amended Complaint (the “Complaint) under Federal
Rules of Civil Procedure 8(a), 9(b), and 12(b)(6) (Defs.’ Mot. to Dismiss, June 24, 2025,
Docket No. 53).
On July 11, 2025, the Court granted Plaintiffs’ TRO motion and denied Defendants’
TRO motion. Gilk v. Fisher, Civ. No. 25-2158, 2025 WL 1920496, at *9–10 (D. Minn. July
11, 2025). 	In general, the Court preliminarily enjoined the parties from, among other
things (1) misappropriating, stealing, or using Fly Boatworks’ trade secrets, designs,
innovations, and inventions for any purpose other than for Fly Boatworks’ benefit; (2)
entering into contracts and business opportunities belonging to Fly Boatworks; (3)
delivering a prototype of Fly Boatworks to anyone, except on behalf of Fly Boatworks and
with prior consent; and (4) sending Fly Boatworks’ designs, specifications, and plans to
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anyone, except on behalf of Fly Boatworks and with prior consent. 	Id. 	The Court also
stayed any payments under “Member Loan #4.” Id. at *10.
DISCUSSION
I. 	STANDARD OF REVIEW
In reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the
Court considers all facts alleged in the Complaint as true to determine if the Complaint
states a “claim to relief that is plausible on its face.” Braden v. Wal-Mart Stores, Inc., 588
F.3d 585, 594 (8 th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). 	The
Court construes the complaint in the light most favorable to the plaintiff, drawing all
reasonable inferences in the plaintiff’s favor. Ashley Cnty. v. Pfizer, Inc., 552 F.3d 659, 665
(8 th Cir. 2009). Although the Court accepts the complaint’s factual allegations as true, it
is “not bound to accept as true a legal conclusion couched as a factual allegation[.]” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). 	“A pleading that offers labels and
conclusions or a formulaic recitation of the elements of a cause of action will not do.”
Iqbal, 556 U.S. at 678 (internal quotation marks omitted). Instead, “[a] claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678.
At the motion to dismiss stage, the Court may consider the allegations in the
complaint as well as “those materials that are necessarily embraced by the pleadings.”
Schriener v. Quicken Loans, Inc., 774 F.3d 442, 444 (8 th Cir. 2014). 	The Court may also
consider matters of public record and exhibits attached to the pleadings, as long as those
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documents do not conflict with the complaint. Porous Media Corp. v. Pall Corp., 186 F.3d
1077, 1079 (8 th Cir. 1999).4
The Court will address the grounds raised in Defendants’ motion to dismiss by first
considering the general pleading requirements under Rule 8, as well as the specific
pleading requirements for derivative actions under Rule 23 and for pleading fraud with
particularity under Rule 9(b). 	It will then turn to Defendants’ argument that Plaintiffs
have failed to state a claim under Rule 12(b)(6).
4 As a threshold matter, the parties dispute which documents the Court may consider
when evaluating Defendants’ motion to dismiss. Defendants argue that the Court may consider
all records filed connection with the parties’ TRO motions—including Fisher’s declaration filed in
opposition to Plaintiffs’ TRO motion (Docket No. 23) and his declaration in support of Defendants’
TRO motion (Docket No. 50)—because such documents are public records. In response, Plaintiffs
argue that the Court should not consider Fisher’s declaration (Docket No. 23) or his supplemental
declaration (Docket No. 50). After careful review of the parties’ arguments, the Court concludes
that it will consider the documents at issue because they are either part of the public record,
embraced by the complaint, or do not contradict the complaint. See Porous Media, 186 F.3d at
1079. The Court also rejects Defendants’ argument that it cannot consider materials that rely on
information derived from Fisher’s email account because Plaintiffs allegedly unlawfully obtained
Fisher’s emails in violation of the Electronic Communications Privacy Act (18 U.S.C. § 2515) and
the Minnesota Privacy in Communications Act (Minn. Stat. § 626A.04). Defendants presented
the same or similar argument in support of their TRO motion, and Court rejected it. Gilk, 2025
WL 1920496, at *8. The Court will reject Defendants’ argument again here because the record
does not support the claim that Plaintiffs stole information from the email account. Instead, the
record indicates that the account was a company email address, not Fisher’s personal email.
Fisher’s email address, flyboatworksjet@gmail.com, appears to be a corporate account;
customer inquiries were automatically forwarded to it; and Fisher shared the account’s login
credentials with the Gilks. (Suppl. Decl. of Daniel Gilk (“Suppl. D. Gilk Decl.”) ¶¶ 5–7, June 10,
2025, Docket No. 43.) 	Although the Court may consider the documents at issue—including
Defendants’ submissions—it must still construe the allegations in the light most favorable to
Plaintiffs and draw all reasonable inferences in their favor. See Ashley Cnty., 553 F.3d at 665. The
Court’s conclusions on this threshold issue do not affect its analysis in this Order.
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II. 	RULE 8—PLEADING REQUIREMENTS
Defendants argue that Plaintiffs’ Complaint must be dismissed because Plaintiffs
filed a shotgun complaint that improperly engages in group pleading in violation of Rule
8.5 Rule 8 requires that a complaint contain “a short and plain statement of the claim
showing that the pleader is entitled to relief[.]” 	Fed. R. Civ. P. 8(a)(2). 	Courts have
repeatedly admonished parties for filing “kitchen-sink” or “shotgun” complaints—
pleadings that assert “every conceivable claim against every conceivable defendant.” See,
e.g., Gurman v. Metro Hous. & Redevelopment. Auth., 842 F. Supp. 2d 1151, 1153, 1153
n.2 (D. Minn. 2011) (collecting cases). A complaint that “lumps all defendants together”
violates Rule 8 because “it does not provide fair notice” of the allegedly offending conduct
to each defendant. Tatone v. SunTrust Mortg., Inc., 857 F. Supp. 2d 821, 831 (D. Minn.
2012). A complaint must specify which claims are asserted against which defendant; it
must plausibly allege “who did what to whom.” Id.
The Court concludes that the Complaint does not violate Rule 8. 	The flaw in
Defendants’ argument is that they isolate the Complaint’s count section and disregard
the Complaint’s extensive factual allegations spanning 102 paragraphs. (See Am. Compl.
¶¶ 15–117 (providing factual allegations).) The Court’s task is to assess the plausibility of
the claims by considering the Complaint as a whole. 	Cf. Matrixx Initiatives, Inc. v.
5 The Court will note that Defendants counter Plaintiffs’ supposed shotgun Complaint by
filing their own shotgun-style motion to dismiss.
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Siracusano, 563 U.S. 27, 47 (2011). When read in that manner, the Complaint adequately
describes each defendant’s conduct supporting the asserted causes of action.
The Complaint here specifies which counts apply to which defendants. Although
Plaintiffs do not name each defendant individually for every count, they define groups of
defendants. The “Defendants” include Fisher, Galt, Baker, and Axocon. (Am. Compl. at
1.) The “Individual Defendants” include Fisher, Galt, and Baker. (Id. ¶ 2.) Plaintiffs then
plead each count based on the alleged involvement of each defendant with respect to
that claim. 	Defendants can be referred to collectively, provided that the complaint
includes sufficient factual allegations identifying each defendant’s personal participation.
See, e.g., 4 Cyc. of Federal Proc. § 14:210 (3d ed.). Plaintiffs provide such specific factual
allegations; they do not rely solely on collective references without attributing any
specific conduct to an individual defendant.
Defendants 	also 	challenge 	Plaintiffs’ 	practice 	of 	incorporating 	preceding
allegations by reference in each cause of action. The Complaint contains 102 paragraphs
of factual allegations followed by eleven causes of action. 	Although each count
incorporates the prior paragraphs, each count sufficiently states the basis for relief under
its respective legal theory, providing Defendants with sufficient notice of the conduct for
which Plaintiffs seek to hold them liable.6
6 See, e.g., Matheson Tri–Gas, Inc. v. Sheehan, Civ. No. 11-401, 2011 WL 1832708, at *2
(M.D. Fla. May 13, 2011) (finding that “although each count incorporates by reference each
factual allegation and each allegation of every preceding count, the complaint falls exceedingly
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The Court declines to dismiss Plaintiffs’ Complaint on the grounds that they
improperly engaged in group pleading in violation of Rule 8.
III. 	RULE 23.1—DERIVATIVE ACTION REQUIREMENTS
Defendants argue that Plaintiffs’ derivative claims must be dismissed because they
fail to satisfy the particularity requirement of Federal Rule of Civil Procedure 23.1. When
a shareholder initiates a derivative action, the shareholder must satisfy Federal of Civil
Procedure 23.1’s pleading requirements, “which incorporate a threshold issue of
substantive state law, the sufficiency of demand or excuse.” 	Cottrell v. Duke, 737 F.3d
1238, 1247 (8 th Cir. 2013). Under Rule 23.1, the plaintiff must file a verified complaint,
which must state, with particularity “(A) any effort by the plaintiff to obtain the desired
action 	from 	the 	directors 	or 	comparable 	authority 	and, 	if 	necessary, 	from 	the
shareholders or members; and (B) the reasons for not obtaining the action or not making
the effort.” Fed. R. Civ. P. 23.1(b)(3). “Although Rule 23.1 contemplates both the demand
requirement and the possibility that demand may be excused, it does not create a
demand requirement of any particular dimension.” Gomes v. Am. Century Co., Inc., 710
F.3d 811, 815 (8 th Cir. 2013) (citation and internal quotation marks omitted). 	If a
short of a shotgun pleading” because it “alleges discrete claims in separate counts and
distinguishes among the three defendants” (internal quotation marks omitted)); Chin v.
DaimlerChrysler Corp., Civ. No. 95-5569, 2005 WL 5121812, at *2 (D.N.J. Dec. 5, 2005) (explaining
that “broad incorporation by reference” of all prior allegations did not result in “neutralization of
a clear and specific characterization of the action” and that “[i]ncorporation by reference of all
preceding allegations is such a common pleading technique that the Court does not feel
comfortable in affording it the substantive significance that defendants seek[]”).
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shareholder does not make a pre-suit demand, the “court must apply state law to
determine whether demand is excused.” Id. The Court therefore must evaluate whether
the demand is excused under Minnesota law.
Upon careful consideration, the Court concludes that the Complaint satisfies Rule
23.1. Under Minn. Stat. § 322C.0902, an LLC member may initiate a derivative action to
enforce a limited liability company’s rights. 	But the member may do so only if (1) the
member makes a demand on the other members, and the other members do not bring
the claim with a reasonable time, or (2) the demand would be futile. 	Minn. Stat.
§ 322C.0902. The Complaint provides the following:
To the extent any claim herein is derivative under Minn. Stat.
322C.0901,7 demand on Fly Boatworks to address the claim
would be futile because the Individual Defendants own 55.6%
of Fly Boatworks and would not be willing to bring these
claims against themselves or their other company, Axocon.
Additionally, on May 20, 2025, the Gilks sent a letter to
Defendants outlining the allegations contained herein. 	To
date, Defendants have not replied to the Gilks’ demands.
(Am. Compl. ¶ 117.)
Here, the Complaint sufficiently alleges that pre-suit demand would be futile. The
Complaint alleges that the Individual Defendants own 55.6% of the company, which is
sufficient to allege futility. See, e.g., Novak v. Miller, No. A22-1164, 2023 WL 2847207, at
7 Although the Complaint cites to Minn. Stat. § 322C.0901 (Direct Action By Member), it
is clear from the context that Plaintiffs intended to cite to Minn. Stat. § 322C.0902 (Derivative
Action).
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*3 (Minn. Ct. App. Apr. 10, 2023) (concluding that complaint alleged futility under Minn.
Stat. § 322C.0902 when defendant owned 50% of the company); Winter v. Farmers Educ.
& Co-op. Union of Am., 107 N.W.2d 226, 227 (Minn. 1961) (“Ordinarily demand should be
made on the board of directors unless the wrongdoers constitute a majority of the
board[.]”). Moreover, the futility of demand is underscored by the terms of the Operating
Agreement, which requires unanimous owner approval for the company to act. 	(Am.
Compl. ¶ 25.) The probability that the Gilks could have obtained the consent of the other
three defendant shareholders—indeed, even one of them—to pursue an action was
effectively zero.
Accordingly, the Court rejects Defendants’ argument that the Complaint fails to
satisfy Rule 23.1’s pleading requirements, and the Court will deny the Defendants’
request for further briefing regarding Rule 23.1’s pleading requirements.
IV. 	RULE 9(B)—COUNT 10: FRAUD
Defendants contend that Plaintiffs’ fraud claim must be dismissed because
Plaintiffs fail to allege fraud with particularity under Rule 9(b).
Claims that sound in fraud are subject to heightened pleading standards under
Rule 9(b), and “must state with particularity the circumstances constituting fraud or
mistake.” Fed. R. Civ. P. 9(b). 	Defendants must be able to “respond specifically, at an
early stage of the case, to potentially damaging allegations of immoral and criminal
conduct.” Abels v. Farmers Commodities Corp., 259 F.3d 910, 920 (8 th Cir. 2001). “Where
multiple defendants are asked to respond to allegations of fraud, the complaint should
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inform each defendant of 	the nature 	of 	his alleged participation in 	the fraud.”
Streambend Props. II, LLC v. Ivy Tower Minneapolis, LLC, 781 F.3d 1003, 1013 (8 th Cir. 2015)
(quoting DiVittorio v. Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir. 1987)).
In other words, “the complaint must identify the ‘who, what, where, when, and how’ of
the alleged fraud.” United States ex rel. Joshi v. St. Luke’s Hosp., Inc., 441 F.3d 552, 556
(8 th Cir. 2006) (citation omitted).
Under Minnesota Law, a plaintiff claiming fraud or intentional misrepresentation
must establish:
(1) a false representation of a past or existing material fact
susceptible of knowledge; (2) made with knowledge of the
falsity 	of 	the 	representation 	or 	made 	without 	knowing
whether it was true or false; (3) with the intention to induce
action in reliance thereon; (4) that the representation caused
action in reliance thereon; and (5) pecuniary damages as a
result of the reliance.
U.S. Bank N.A. v. Cold Spring Granite Co., 802 N.W.2d 363, 373 (Minn. 2011).
Defendants argue that Plaintiffs fail to allege the “who, what, where, when, and
how” of the alleged fraud. 	See Joshi, 441 F.3d at 556. 	The Court disagrees. 	Like
Defendants’ Rule 8 argument regarding group pleading, this contention focuses narrowly
on the nine-paragraph fraud count while disregarding the detailed factual allegations set
forth in the Complaint’s broader factual background. 	When all the allegations are
considered as a whole, Plaintiffs have pleaded their fraud claim with the requisite
particularity. The Complaint identifies specific dates of allegedly fraudulent statements,
the individuals who made them, and the circumstances under which they were made.
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Rule 9(b) does not require plaintiffs to plead every detail of an alleged fraud; it
requires only allegations sufficient to enable defendants to respond. 	See Evangelical
Lutheran Church in Am. Bd. of Pensions v. Spherion Pac. Workforce LLC, Civ. No. 04-4791,
2005 WL 1041487, at *3 (D. Minn. May 4, 2005) (explaining that although some
allegations “suffer[ed] from a lack of specification,” the complaint, “analyzed as a whole,
adequately 	puts 	[the 	defendant] 	on 	notice 	of 	the 	particular 	instances 	of
misrepresentation”). At this stage of the proceedings, the Court is satisfied that Plaintiffs
have met their pleading burden under Federal Rule of Civil Procedure 9(b).
V. 	RULE 12(B)(6)—FAILURE TO STATE A CLAIM
Plaintiffs bring eleven counts in its operative complaint: Count 1, misappropriation
of trade secrets in violation of Minn. Stat. § 325C.01, et seq. and 18 U.S.C. § 1836, et seq.;
Count 2, breach of contract; Count 3, breach of fiduciary duties; Count 4, breach of the
covenant of good faith and fair dealing; Count 5, civil conspiracy; Count 6, conversion/civil
theft; Count 7, unjust enrichment; Count 8, accounting; Count 9, tortious interference
with prospective economic advantage and contract; Count 10, fraud; and Count 11,
injunctive relief.
Defendants move to dismiss each of these claims for failure to state a claim on
several different grounds. The Court will address each ground or count in turn.
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A. 	Independent Duty Rule
Defendants argue that Plaintiffs’ six tort claims are barred by the independent duty
rule and should therefore be dismissed.8 	The independent duty rule provides that a
plaintiff cannot recover damages in tort for an alleged breach of contract except in
“exceptional 	cases 	where 	the 	defendant’s 	breach 	of 	contract 	constitutes 	or 	is
accompanied by an independent tort.” Wild v. Rarig, 234 N.W.2d 775, 789 (Minn. 1975);
see also Hanks v. Hubbard Broad., Inc., 493 N.W.2d 302, 308 (Minn. Ct. App. 1992). But
the mere existence of a governing contract between the parties does not preempt or
eliminate the possibility of a tort claim. AKA Distrib. Co. v. Whirlpool Corp., 137 F.3d 1083,
1086 (8 th Cir. 1998). If a tort claim is based on a breach of duty that “is indistinguishable
from the breach of contract[,]” the tort claim will fail, but if “a relationship would exist
which would give rise to the legal duty without enforcement of the contract promise
itself,” the tort claim is viable. Hanks, 493 N.W.2d at 308 (citation omitted). The Court
will address the applicability of the independent duty rule to each of the claims challenged
by Defendants.
First, Plaintiffs’ claim for breach of fiduciary duty (Count 3) against the Individual
Defendants is not barred by the independent duty rule because Plaintiffs base their
8 According to Defendants, Plaintiffs’ tort claims include Count 3, breach of fiduciary
duties; Count 5, civil conspiracy; Count 6, conversion/civil theft; Count 7, unjust enrichment;
Count 9, tortious interference with prospective economic advantage and contract; and Count 10,
fraud.
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breach of fiduciary duty claim on statutory and common law fiduciary duties, in addition
to the fiduciary duty imposed by the Operating Agreement. (See Am. Compl. ¶ 137.) If
the Plaintiffs based their fiduciary duty claim solely on the parties’ Operating Agreement,
the claim would be barred. But the Complaint does not rely exclusively on the Operating
Agreement. 	It relies on statutory and common law duties. 	Under Minn. Stat.
§ 322C.0409, subds. 2–3, members of a limited liability company owe duties of loyalty and
care to the company, and those statutory duties apply here because Fly Boatworks is
organized as an LLC. The parties may also be bound by common law fiduciary obligations.
Cf. Berreman v. W. Pub. Co., 615 N.W.2d 362, 367 (Minn. Ct. App. 2000) (“At common
law, the shareholders in a close corporation owe one another a fiduciary duty.”). Where
such fiduciary duties exist, an alleged breach is distinct from a breach of contract, and the
independent duty rule does not apply. 	See U.S. Bank Nat’l Ass’n v. San Antonio Cash
Network, 252 F. Supp. 3d 714, 721 (D. Minn. 2017) (“Where [fiduciary] duties exist, even
if arising from a contract, an alleged breach of those duties is distinct from the [alleged]
breach of contract, . . . and hence the independent-duty rule will not apply.” (citations
and internal quotation marks omitted)). Because Plaintiffs allege breaches of statutory
and common law duties independent of the Operating Agreement, the Court declines to
dismiss the fiduciary duty claim under the independent duty rule.
Second, the Court declines to dismiss Plaintiffs’ civil conspiracy claim (Count 5) as
barred by the independent duty rule. Although the parties do not substantively address
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the independent duty rule’s application to the civil conspiracy, courts have stated that
because civil conspiracy is a theory of liability rather than a stand-alone cause of action,
it must be supported by an underlying tort. BitNile, Inc. v. Perrill, Civ. No. 22-2911, 2023
WL 5723818, at *8 (D. Minn. Sept. 5, 2023). Because Plaintiffs allege an underlying tort
(e.g., tortious interference) and Defendants have not shown that the independent duty
rule bars Plaintiffs’ civil conspiracy claim, the Court will not dismiss the civil conspiracy
claim on the basis of the independent duty rule.
Third, the independent duty rule does not preclude Plaintiffs’ conversion and civil
theft claim (Count 6) because the Complaint alleges that Defendants owed fiduciary
duties under Minnesota statutory and common law. See Polaris Indus., Inc. v. Mangum,
690 F. Supp. 3d 966, 975–76 (D. Minn. Sept. 7, 2023) (finding that conversion claim was
not precluded by the independent duty rule because plaintiff pled a common law duty of
confidentiality independent from the parties’ contractual duties).
Fourth, 	although 	the 	parties 	do 	not 	meaningfully 	address 	whether 	the
independent duty rule applies to unjust enrichment claims, the Court concludes that the
rule does not bar Plaintiffs’ unjust enrichment claim (Count 7). The independent duty rule
bars tort claims when the tort claim is based on the same underlying conduct as the
contract claim. 	See id. at 975. 	But unjust enrichment is an equitable claim, not a tort
claim. See, e.g., United States v. Bame, 721 F.3d 1025, 1030 (8 th Cir. 2013). Moreover,
under Minnesota law, unjust enrichment is not available where there is an express
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contract between the parties, and the plaintiff has an adequate legal remedy. Id. Thus,
if a contract does not exist, the independent duty rule is not implicated. Conversely, if a
valid contract does exist, Plaintiffs’ unjust enrichment claim fails on the merits. 	Stated
differently, Plaintiffs’ unjust enrichment claim is not barred by the independent duty rule
because such claim necessarily rests on the absence of a contract. The Court therefore
declines to dismiss the unjust enrichment claim as barred by the independent duty rule.
Fifth and Sixth, Plaintiffs’ claims for tortious interference with prospective
economic advantage and contract (Count 9) and fraud (Count 10) are also not barred by
the independent duty rule. 	As previously discussed, Plaintiffs allege that Defendants
owed 	fiduciary 	duties under 	Minnesota 	statutory 	and 	common 	law, 	which 	arise
independently of any contract. 	Because these duties exist outside the contract, the
independent duty rule does not apply. See N. Cent. EMS Corp. v. Bound Tree Med., LLC,
Civ. No. 15-2793, 2016 WL 544472, at *6–7, 9 (D. Minn. Feb. 10, 2016) (dismissing tortious
interference and fraud claims but only where defendant’s duty arose out of contract).
In conclusion, the independent duty rule does not bar any of the claims challenged
by Defendants at this stage.
B. 	Count 1: DTSA and MUTSA (All Defendants)
Defendants argue that Plaintiffs’ trade secret claims must be dismissed. 	The
federal Defend Trade Secrets Act of 2016 (“DTSA”), 18 U.S.C. § 1836 et seq., and the
Minnesota Uniform Trade Secrets Act (“MUTSA”), Minn. Stat. § 325C.01 et seq., each
provide a private cause of action for misappropriation of trade secrets.
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To prevail on a misappropriation of trade secrets claim under the DTSA or the
MUTSA, the plaintiff must prove (1) the existence of a trade secret possessed by the
plaintiff and (2) misappropriation of the trade secret by the defendant.9 18 U.S.C. § 1839;
Minn. Stat. § 325C.01. First, to allege the existence of a trade secret, the plaintiff must
allege (1) it possessed information that derived independent economic value from its
secrecy; (2) the information was not readily ascertainable by others; and (3) it took
reasonable steps to keep the information secret. 	18 U.S.C. § 1839(3); Minn. Stat.
§ 325C.01, subd. 5; see also Protégé Biomedical, LLC v. Z-Medica, LLC, 394 F. Supp. 3d 924,
938–39 (D. Minn. 2019). Second, to allege misappropriation, the plaintiff must allege the
defendant acquired, disclosed, or used a trade secret without the consent of its owner
when the defendant either used improper means to acquire it or knew or should have
known, at the time of disclosure or use, it had been acquired by improper means or from
someone with a duty to maintain its secrecy. 18 U.S.C. § 1839(5); Minn. Stat. § 325C.01,
subd. 3; Protégé Biomedical, 394 F. Supp. 3d at 939. 	“Improper means” includes
breaching or inducing a breach of a duty to maintain the trade secret’s secrecy. 18 U.S.C.
§ 1839(6); Minn. Stat. § 325C.01, subd. 2.10
9 Under the DTSA, the plaintiff must also establish that the trade secret was used in or
intended for use in interstate or foreign commerce. 18 U.S.C. § 1836(b)(1).
10 Because the MUTSA and the DTSA are materially similar, courts routinely analyze such
claims together. See, e.g., Prime Therapeutics LLC v. Beatty, 354 F. Supp. 3d 957, 967 (D. Minn.
2018).
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The issue presented by Defendants’ motion concerns the first requirement—the
existence of a trade secret. 	Defendants argue that the Complaint fails to allege the
existence of a trade secret for essentially two reasons. First, the Complaint fails to allege
that Plaintiffs took reasonable efforts maintain secrecy of the alleged trade secrets.11
Second, Defendants argue that Plaintiffs’ alleged trade secrets fail to differentiate
between features that were state of art in existing designs and those that Fly Boatworks
added and now claim as “trade secrets.” The Court will address each argument in turn.
1. 	Existence of Trade Secrets
“Reasonable efforts to maintain secrecy need not be overly extravagant, and
absolute secrecy is not required.” AvidAir Helicopter Supply, Inc. v. Rolls-Royce Corp., 663
F.3d 966, 974 (8 th Cir. 2011). 	Confidentiality agreements and annual affirmance of
confidentiality agreements are likely reasonable efforts, see Prime Therapeutics LLC v.
Beatty, 354 F. Supp. 3d 957, 968 (D. Minn. 2018), while a failure to disseminate materials
on a need-to-know basis with requirements that the information be kept confidential fails
11 Defendants argue that fiduciary duties alone cannot create trade secrets. 	But that
argument overlooks Plaintiffs’ allegations that they took reasonable steps to maintain the secrecy
of the information at issue. To be sure, “employees have a common law duty not to use trade
secrets or confidential information obtained from their employer.” 	Eaton Corp. v. Appliance
Valves Corp., 971 F.2d 136, 141 (8 th Cir. 1992). That principle also aligns with this Court’s prior
observation that, “in a closely held company with only five members, reliance on only fiduciary
duties to preserve confidential information would be reasonable.” Gilk, 2025 WL 1920496, at *5.
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the reasonable efforts standard, see Prairie Field Servs., LLC v. Welsh, 497 F. Supp. 3d 381,
396 (D. Minn. 2020).
The Court concludes that Plaintiffs have done enough to show at this early stage
that they took reasonable steps to maintain secrecy such that they plausibly allege that
the Skiff Innovations qualify as trade secrets. 	Plaintiffs’ disclosure to Martac does not
defeat 	its 	trade 	secrets 	claim 	because 	Fly 	Boatworks’ 	disclosures 	were 	likely 	in
furtherance of applying the trade secret to its intended use. See Kewanee Oil Co. v. Bicron
Corp., 416 U.S. 470, 475 (1974) (“[S]ecrecy is not lost, however, if the holder of the trade
secret reveals the trade secret to another in confidence . . . . in order to apply [the trade
secret] to the uses for which it is intended.” (citation and internal quotation marks
omitted)). 	If Fly Boatworks wanted to market the Skiff Innovations, it is reasonable to
assume that it would need to disclose the information to potential partners, such as
Martac.
Nor does Plaintiffs’ disclosure of the information to industry expert Chris Morejohn
for the purpose of obtaining feedback, by itself, defeat their trade-secret claim, because
it appears that the information was shared in confidence. 	See id. 	After Daniel Gilk
discussed the Skiff Innovations with Chris Morejohn, Morejohn wrote “I just want to say
here in writing all that you shared with me will not be shown to anyone else unless you
say it’s ok.” 	(Suppl. D. Gilk Decl. ¶ 13, Ex. GG at 1, June 10, 2025, Docket No. 43.)
Morejohn’s email supports the inference that when the Gilks spoke to outsiders about
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confidential information they did so with the understanding that the information would
be kept confidential.12
Accordingly, 	the 	Court 	concludes 	that 	Plaintiffs 	have 	plausibly 	alleged 	the
existence of trade secrets.
2. 	Description of Trade Secrets
Defendants also argue that the Complaint fails to allege the existence of a trade
secret because, they assert, Plaintiffs have failed to adequately describe their trade
secrets. 	Defendants argue that Plaintiffs’ alleged trade secrets fail to differentiate
between features that were already state-of-the-art and those that Fly Boatworks added
and now claim as “trade secrets.”
Because of the sensitive nature of the alleged trade secret information underlying
the claims, a plaintiff need not “identify [its] trade secrets with specificity in the . . .
12 Defendants argue that Plaintiffs fail to allege a trade secret because the skiff
“marketplace is a ‘knock off’ marketplace.” (See Defs.’ Mem. Supp. Mot. to Dismiss at 10, June
24, 2025, Docket No. 55 (quoting Surgidev Corp. v. Eye Tech., Inc., 648 F. Supp. 661, 689 (D. Minn.
1986).) It is true that assets are not afforded trade secret status when they can be easily reversed
engineered. 	See Kewanee Oil, 416 U.S. at 475 (“A trade secret law, however, does not offer
protection against discovery by fair and honest means, such as by independent invention,
accidental disclosure, or by so-called reverse engineering, that is by starting with the known
product and working backward to divine the process which aided in its development or
manufacture.”) 	The Complaint, however, suggests that the skiff market is not a “knock off”
marketplace. 	The Complaint alleges that despite working with Martec on behalf of Axocon,
Fisher continued to seek the Gilks’ engineering services to improve the M18. (Am. Comp. ¶ 59.)
The fact that Fisher cannot reverse engineer Gilks’ designs supports the inference that the skiff
market is not a “knock off” marketplace. Indeed, Chris Morejohn, who Defendants argue created
the skiff that the Gilks copied, acknowledged that the Gilks were doing something new. (Suppl.
D. Gilk Decl. ¶ 13, Ex. GG at 2 (“What you have done is what I [Chris Morejohn] have been hoping
for in sharing my designs and ideas online, something new.”).)
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Complaint.” Deluxe Fin. Servs., LLC v. Shaw, Civ. No. 16-3065, 2017 WL 3327570, at *4 n.3
(D. Minn. Aug. 3, 2017). Indeed, to do so would “paradoxically jeopardize” the plaintiff’s
ability to protect its trade secrets. Id. At the same time, as with any claim, the plaintiff
“cannot rely on conclusory statements that simply repeat the elements of its claim; the
plaintiff must disclose sufficient information to infer more than a mere possibility of
misconduct.” TE Connectivity Networks, Inc. v. All Sys. Broadband, Inc., Civ. No. 13-1356,
2013 WL 6827348, at *3 (D. Minn. Dec. 26, 2013).
The Court concludes that Plaintiffs have more than adequately described their
alleged trade secrets to survive a motion to dismiss. For example, Paragraph 19 of the
Complaint lists and describes four “critical innovations” that were incorporated into the
F2 Carbon. 	Read in conjunction with the rest of the Complaint, these allegations are
sufficient to place Defendants on notice of the basis for Plaintiffs’ claim that the
information taken qualified as trade secrets. 	The Court expects that the contours of
Plaintiffs’ alleged trade secrets will be fleshed out after discovery. SL Montevideo Tech.,
Inc. v. Eaton Aerospace, LLC, 292 F. Supp. 2d 1173, 1179 (D. Minn. 2003) (acknowledging
that “[t]he exact nature of the trade secret is a matter for discovery”).
Accordingly, 	the 	Court 	concludes 	that 	Plaintiffs 	have 	plausibly 	alleged 	the
existence of trade secrets and have described them sufficiently to survive a motion to
dismiss.
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C. 	MUTSA Displacement
Defendants contend that Plaintiffs’ non-MUTSA claims (Counts 2–7, 9–10) must be
dismissed because they are displaced by MUTSA. The MUTSA “displace[s] conflicting tort,
restitutionary, and other law of [the] state providing civil remedies for misappropriation
of a trade secret.” 	Minn. Stat. § 325C.07(a). 	However, the MUTSA does not affect
contractual remedies or civil remedies that are not based upon misappropriation of a
trade secret. Id. § 325C.07(b). Thus, a plaintiff may “maintain separate causes of action
‘to the extent that the causes of action have “more” to their factual allegations than the
mere misuse or misappropriation of trade secrets.’” SL Montevideo Tech., 292 F. Supp.
2d at 1179 (quoting Micro Display Sys., Inc. v. Axtel, Inc., 699 F. Supp. 202, 205 (D. Minn.
1988)). The Court will address each claim in turn.
Breach of Contract (Count 2). 	MUTSA does not displace Plaintiffs’ breach of
contract claim for two reasons. First, MUTSA does not affect contractual remedies. See
Minn. Stat. § 325C.07(b)(1). 	Second, the Complaint contains “more” to their factual
allegations than simply misappropriation of trade secrets. 	Specifically, the Complaint
alleges that the Individual Defendants (1) usurped Fly Boatworks’ opportunities, (2) used
assets (including, but not limited to trade secrets) for Axocon’s benefit, (3) commingled
Fly Boatworks’ property, (4) acted on behalf of entities adverse to Fly Boatworks, (5)
competed with Fly Boatworks, (6) failed to discharge their duties in good faith, (7)
impaired Fly Boatworks’ business operations, and (8) executed contracts without
Plaintiffs’ knowledge. (Am. Comp. ¶ 133.) Because Count 2 is grounded in contract and
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rests on allegations that go beyond the alleged theft of trade secrets, Count 2 is not
displaced.
Breach of Fiduciary Duty (Count 3) and Civil Conspiracy (Count 5). 	The Court
concludes that Plaintiffs’ claims for breach of fiduciary duty and civil conspiracy13 are
displaced only to the extent they are based on misappropriation of trade secrets. 	The
Complaint contains “more” to the factual allegations than mere misappropriation of trade
secrets. 	Like the breach of contract claim, the Complaint alleges that the Individual
Defendants (1) usurped Fly Boatworks’ opportunities, (2) used assets (including, but not
limited to trade secrets) for Axocon’s benefit, (3) commingled Fly Boatworks’ property,
(4) acted on behalf of entities adverse to Fly Boatworks, (5) competed with Fly Boatworks,
(6) failed to discharge their duties in good faith, (7) impaired Fly Boatworks’ business
operations, (8) made unlawful capital calls and unlawfully called loans, and (9) executed
contracts without Plaintiffs’ knowledge. (Am. Comp. ¶¶ 140, 155.)
Breach of Covenant of Good Faith and Fair Dealing (Count 4). Plaintiffs’ claim for
breach of the covenant of good faith and fair dealing is claim is not displaced because it
is grounded in parties’ contract, namely the Operating Agreement (Am. Compl. ¶ 145),
13 To demonstrate a civil conspiracy, a plaintiff must demonstrate that the defendants
“agreed to accomplish an unlawful purpose, and took concerted actions to achieve that
purpose.” 	Marty H. Segelbaum, Inc. v. MW Cap., LLC, 673 F. Supp. 2d 875, 880–81 (D. Minn.
2009) (citing Harding v. Ohio Cas. Ins. Co., 41 N.W.2d 818, 824 (Minn. 1950)). Additionally, the
defendants’ actions must be based on an underlying intentional tort. Id. 	Because some of
Plaintiffs’ tort claims survive, this claim also survives, except to the extent it is displaced under
MUTSA.
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and MUTSA does not affect contractual remedies. Minn. Stat. § 325C.07(b)(1). Count 4
is therefore not displaced by MUTSA.
Conversion/Civil Theft (Count 6). 	Count 6 is displaced in part. 	The Complaint
contains “more” to the factual allegations than mere misappropriation of trade secrets.
The Complaint specifically alleges that Defendants converted, in addition to trade secrets,
“money, property, assets, . . . and funds” that belong to Fly Boatworks. 	(Am. Comp.
¶ 161.) The Court therefore concludes that this claim is displaced only to the extent it is
based on misappropriation of trade secrets. However, for the reasons set forth below,
Plaintiffs fail to plausibly allege claims for conversion and civil theft. As a result, Count 6
will be dismissed in full.
Unjust Enrichment (Count 7). 	The 	Court concludes 	that 	Plaintiffs’ 	unjust
enrichment claim is displaced only to the extent it is based on the misappropriation of
trade secrets. Although the basis on which Plaintiffs rest their unjust enrichment claim is
not entirely clear, it is clear—when reading the Complaint as a whole—that Plaintiffs’
unjust enrichment claims is based on “more” than mere trade secret misappropriation.
Notably, the unjust enrichment count does not reference “trade secrets” at all. (See Am.
Compl. ¶¶ 167–172.) 	Accordingly, the Court finds that the unjust enrichment claim is
displaced only insofar as it relies on the alleged misappropriation of trade secrets.
Tortious Interference (Count 9). 	The Complaint contains “more” to the factual
allegations than mere misappropriation of trade secrets as it alleges that Defendants
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interfered with Plaintiffs’ reasonable expectation of economic advantage and contract by
creating competing companies and usurping Fly Boatworks’ business opportunities by
diverting such opportunities “to Axocon, MASC, and other unknown entities.” 	(Am.
Comp. ¶ 179.) 	Count 9 is therefore displaced only to the extent it is based on
misappropriation of trade secrets.
Fraud (Count 10). Plaintiffs’ fraud claim is displaced only to the extent it is based
on misappropriation of trade secrets because the Complaint alleges “more” than simply
trade secret misappropriation. 	Plaintiffs base their fraud claim on Defendants’ “false
representations of material fact when they represented to the Gilks that the parties
would share all profits derived from the Gilks’ invention, design, development, and
innovations related to the F2 Carbon and M18” as well as Defendants’ continued false
representations that they were negotiating with Martac and Indoor Labs on Fly
Boatworks’ behalf. (Am. Comp. ¶¶ 185–86.) Therefore, the fraud claim is displaced only
to the extent it is based on misappropriation of trade secrets.
In sum, MUTSA displaces claims to the extent they are based on misappropriation
of trade secrets. MUTSA does not affect contractual remedies. Under MUTSA, Plaintiffs’
claims for breach of contract and breach of the covenant of good faith and fair dealing
are not displaced by MUTSA because those claims are grounded in contract. Plaintiffs’
claims for breach of fiduciary duties, civil conspiracy, conversion/civil theft, unjust
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enrichment, tortious interference, and fraud are displaced only to the extent they are
based on theft of trade secrets.
D. 	Count 6: Conversion/Civil Theft
Plaintiffs base their conversion/civil theft claim on the Defendants’ unlawful taking
of Plaintiffs’ “money, property, assets, trade secrets, and funds.” (Am. Comp. ¶¶ 160–
62.) Defendants argue that Plaintiffs’ claim for conversion/civil theft should be dismissed
because (1) the Complaint fails to identify the converted property; (2) the Complaint fails
to plead the deprivation element; (3) MUTSA displaces the conversion/civil theft claim;
(4) the Complaint fails to identify specific stolen funds; (5) the Complaint fails to plead an
initial wrongful taking; and (6) the conversion was not “surreptitious” because the
Defendants, three of five of Fly Boatworks’ members, knew about the taking. 	After
careful consideration, the Court concludes that Plaintiffs fail to plausibly allege conversion
and civil theft and will dismiss those claims.
1. 	Conversion
Conversion is “an act of willful interference with [the personal property of
another], done, without lawful justification, by which any person entitled thereto is
deprived of use and possession, and the exercise of dominion and control over goods
inconsistent with, and in repudiation of, the owner’s rights in those goods.” Christensen
v. Milbank Ins. Co., 658 N.W.2d 580, 585 (Minn. 2003) (citation modified). The elements
of common law conversion are: “(1) plaintiff holds a property interest; and (2) defendant
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deprives plaintiff of that interest.” Williamson v. Prasciunas, 661 N.W.2d 645, 649 (Minn.
Ct. App. 2003).
The Court concludes that Plaintiffs’ conversion claim fails on several fronts. First,
to the extent the claim is based on theft of trade secrets, the claim fails because (1) the
claim is displaced under MUTSA, Minn. Stat. § 325C.07(a), and (2) under Minnesota law,
trade secrets are not subject to conversion, Jacobs v. Gradient Ins. Brokerage, Inc., Civ.
No. 15-3820, 2016 WL 1180182, at *3 (D. Minn. Mar. 25, 2016). Second, to the extent
the claim is based on the alleged theft of “money” or “funds,” it fails because Minnesota
does not appear to recognize a conversion claim for money unless the funds are specific
and identifiable. RSS Fridley, LLC v. Nw. Orthopaedic Surgeons P’ship, LLP, No. A21-664,
2022 WL 200359, at *12 (Minn. Ct. App. Jan. 24, 2022) (indicating that conversion applies
only to tangible property, and that money—being intangible—is not subject to conversion
unless it is “specific and capable of identification”). Plaintiffs respond that the money is
sufficiently identifiable, relying on Fisher’s financial estimates of the profits Fly Boatworks
expected to receive from skiff sales. 	But the Court concludes that these funds are not
sufficiently specific and identifiable as they are merely a projection of future profit. TCI
Bus. Cap., Inc v. Five Star Am. Die Casting, LLC, 890 N.W.2d 423, 429 (Minn. Ct. App. 2017)
(“[A] conversion claim is viable with respect to money only if the money is in a tangible
form (such as a particular roll of coins or a particular stack of bills) and is kept separate
from other money.”). 	Third, to the extent Plaintiffs’ conversion claim is based on
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Defendants’ conversion of Plaintiffs’ “assets” (Am. Comp. ¶¶ 160–62), the allegation is
vague and conclusory, and thus insufficient to survive a motion to dismiss.
2. 	Civil Theft
Minnesota’s civil theft statute provides that “[a] person who steals personal
property from another is civilly liable to the owner of the property for its value when
stolen plus punitive damages of either $50 or up to 100 percent of its value when stolen,
whichever is greater.” Minn. Stat. § 604.14, subd. 1. Minnesota courts have interpreted
the word “steal” to mean “that a person wrongfully and surreptitiously takes another
person’s property for the purpose of keeping it or using it.” 	Staffing Specifix, Inc.
TempWorks Mgmt. Servs. Inc., 896 N.W.2d 115, 126 (Minn. Ct. App. 2017) (quoting TCI
Bus. Cap., 890 N.W.2d at 431. 	“This definition makes clear that for a person to steal
something, there must be some initial wrongful act in taking possession of the property.”
Id. (emphasis added). In contrast to conversion, “federal courts in Minnesota routinely
permit intangible funds to support claims of civil theft.” De Castro v. Castro, Civ. No. 18-
1449, 2018 WL 6026089, at *4 (D. Minn. Nov. 16, 2018).
Although civil theft is broader than the tort of conversion in that theft of funds may
support a civil theft claim, there must an “initial wrongful act in taking possession of the
property.” Staffing Specifix, 896 N.W.2d at 126. The Complaint fails to allege an “initial
wrongful act” because the Defendants, as co-owners of Fly Boatworks, lawfully possessed
the allegedly stolen property before any wrongful acts occurred. See Hajiabdi v. Metro.
Transp. Network, Inc., Civ. No. 21-268, 2021 WL 5177413, at *5 (D. Minn. Nov. 8, 2021).
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Because the Complaint fails to plausibly allege an initial wrongful act in taking possession
of the property, Court will dismiss the civil theft claim.
Accordingly, Plaintiffs fail to plausibly state a claim for conversion and civil theft
under Minn. Stat. § 604.14. The Court will therefore dismiss Count 6 for failure to state a
claim.
E. 	Count 7: Unjust Enrichment
Defendants argue that Plaintiffs’ unjust enrichment claim should be dismissed
because under Minnesota law, unjust enrichment is not available where there is an
express contract between the parties and the plaintiff has “an adequate legal remedy[.]”
Bame, 721 F.3d at 1030; Sterling Cap. Advisors, Inc. v. Herzog, 575 N.W.2d 121, 126 (Minn.
Ct. App. 1998). 	Defendants argue that Plaintiffs’ unjust enrichment claim should be
dismissed because they have an adequate legal remedy by way of their claims for breach
of contract and trade secret misappropriation under the DTSA and the MUTSA.
The Court concludes that Defendants’ argument that Plaintiffs’ unjust enrichment
claim should be dismissed is premature. See Masterson Pers., Inc. v. The McClatchy Co.,
Civ. No. 05-1274, 2005 WL 3132349, at *7 (D. Minn. Nov. 22, 2005) (noting that when an
unjust enrichment claim is pleaded in the alternative to a breach of contract claim,
dismissal “is not appropriate at this early stage of the case”). 	Federal Rule of Civil
Procedure 8(d)(2) permits a party to “plead alternative theories of relief under both legal
and equitable grounds.” LePage v. Blue Cross & Blue Shield of Minn., Civ. No. 08-584,
2008 WL 2570815, at *8 (D. Minn. June 25, 2008). Even though Plaintiffs cannot “obtain
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double recovery,” they are permitted to pursue multiple alternative theories of relief,
including claims under statute, breach of contract, and unjust enrichment. Id. Because
Plaintiffs have properly pled their unjust enrichment claim in the alternative, the Court
declines to dismiss this claim at this time. The Court will, however, dismiss the claim to
the extent the claim is based on misappropriation of trade secrets, as discussed above.
F. 	Counts 8 and 11: Accounting and Injunctive Relief
Defendants seek dismissal of Plaintiffs’ claims for injunctive relief and accounting
on the grounds that these counts are remedies, not independent causes of action. The
Court agrees. See Motley v. Homecomings Fin., LLC, 557 F. Supp. 2d 1005, 1014 (D. Minn.
2008) (dismissing claims for declaratory relief, injunctive relief, and an accounting
because they were “merely remedies, not separate causes of action”). That said, Plaintiffs
may pursue these remedies in connection with the other claims set forth in the
Complaint.
G. 	Damages
Defendants argue that the Complaint fails to allege damages as to its conversion
and tortious interference claims (Counts 6 and 9). 	Because the Court will dismiss the
conversion claim for failure to state a claim (as discussed above), it need not address
whether the Complaint pleads damages with respect to that claim. 	The Court will,
however, address whether Plaintiffs plausibly allege damages as to their tortious
interference claims.
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Under Minnesota law, to state a claim for tortious interference with a contract or
prospective economic advantage, the plaintiff must allege damages—among other
things. N. PCS Servs., LLC v. Sprint Nextel Corp., Civ. No. 05-2744, 2006 WL 1072075, at
*3 (D. Minn. Apr. 21, 2006) (listing elements for tortious interference with contractual
relationship); Gieseke ex rel. Diversified Water Diversion, Inc. v. IDCA, Inc., 844 N.W.2d
210, 219 (Minn. 2014) (listing elements for tortious interference with prospective
economic advantage).
At this early stage of the litigation, the Court is satisfied that Plaintiffs have met
their pleading burden with respect to the damages element. Plaintiffs allege that Fisher
estimated that the partnership between Fly Boatworks and Martac would generate $45.9
million of revenue and $23 million of profits per year. (Am. Comp. ¶¶ 48–52.) Plaintiffs
also detail how Fisher created another entity, MASC, to secure a manufacturing contract
with Martac, thereby cutting Fly Boatworks out of the deal. (Am. Comp. ¶ 61.) Based on
these allegations, as well as those detailed elsewhere in the Complaint, the Court finds
that Plaintiffs have plausibly alleged damages for their tortious interference claims.
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY 	ORDERED 	that 	Defendants’ 	Motion 	to 	Dismiss 	Plaintiffs’ 	First 	Amended
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Complaint (Docket No. [53]) is GRANTED in part and DENIED in part, as follows with
respect to each Count of Plaintiffs’ Amended Complaint:
1. 	Count 1: DTSA (18 U.S.C. § 1836, et seq.) and MUTSA (Minn. Stat. § 325C.01, et.
seq.) – DENIED;
2. 	Count 2: Breach of Contract – DENIED;
3. 	Count 3: Breach of Fiduciary Duties – DENIED, except to the extent such claim
based on the misappropriation of trade secrets;
4. 	Count 4: Breach of the Covenant of Good Faith and Fair Dealing – DENIED;
5. 	Count 5: Civil Conspiracy – DENIED, except to the extent such claim is based on
the misappropriation of trade secrets;
6. 	Count 6: Conversion/Civil Theft – GRANTED;
7. 	Count 7: Unjust Enrichment – DENIED, except to the extent such claim is based
on the misappropriation of trade secrets;
8. 	Count 8: Accounting – GRANTED, but Plaintiffs may pursue this remedy in
connection with other claims set forth in the Complaint;
9. 	Count 9: Tortious Interference with Prospective Economic Advantage and
Contract 	– 	DENIED, 	except 	to 	the 	extent 	such 	claim 	is 	based 	on 	the
misappropriation of trade secrets;
10. Count 10: Fraud – DENIED, except to the extent such claim is based on the
misappropriation of trade secrets;
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11. Count 11: Injunctive Relief – GRANTED, but Plaintiffs may pursue this remedy
in connection with other claims set forth in the Complaint; and
12. Defendants’ request for further briefing on Rule 23.1’s requirements is DENIED
without prejudice.
DATED: March 31, 2026 	_____/s/ John R. Tunheim_____
at Minneapolis, Minnesota. 	JOHN R. TUNHEIM
United States District Judge
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