CHARLESTON – A Putnam County businessman is suing the vice president of the Gas & Oil Association of West Virginia after he claims the man oppressed and squeezed him out of a business they created together.
Ezra Schoolcraft filed his complaint November 1 in Kanawha Circuit Court against Jeffrey Isner and PBC Energy LLC. Isner is the VP of GO-WV and the co-founder and CEO of Pillar Energy LLC.
GO-WV is a non-profit that works to promote all aspects of the oil and natural gas industry in the state. It was created by the merger of the West Virginia Oil and Natural Gas Association (WVONGA) into the Independent Oil and Gas Association of West Virginia in 2021.
Isner
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According to his complaint, Schoolcraft and Isner were longtime friends and business associates. Together, they created and had membership interests in PBC, Pillar Energy LLC, Pillar Enterprises LLC, Pillar Fund 1 LLC, Pillar Fund 2 LLC and Sycamore Midstream LLC.
The men worked together in a business adjacent to the oil and gas industry. Isner was in sales, and Schoolcraft was on the technical side. In 2009, they started purchasing oil and gas wells. Eventually, both had left their other jobs to devote their time to Pillar and the related companies. Schoolcraft says he deferred many paychecks. The deferral was rolled into a debt owed to him.
The complaint says Isner handled the administrative and office aspects of the job while Schoolcraft still did the technical and field work.
“But as a result of tortious actions taken by Jeff after the companies began generating substantial revenue and became valuable, things changed,” the complaint states. “At its core, this case arose out of Jeff’s mismanagement, self-dealing, intentional nondisclosure of critical business information related to the business entities that occurred in the later years of operation and his efforts to conceal his numerous misdeeds.”
Schoolcraft claims Isner violated duties he owed Ezra and the businesses.
“But that is only the tip of Jeff’s iceberg of tortious activity,” the complaint states. “As Jeff’s mismanagement and self-dealing started to become evident, Ezra diligently endeavored to prevent it. However, unbeknownst to Ezra and despite his best efforts, Jeff had intentionally hid information – including improper actions that Jeff had taken – about the business entities.”
Schoolcraft says Isner had tried to hide bad deals, worse renegotiations and self-motivated unilateral actions. When he confronted Isner about it, Schoolcraft says Isner “sought to vindictively punish and harm” him.
“Jeff intentionally sought to, and did, deprive Ezra of valuable interests in, and benefits from, the business entities,” the complaint states. “As a result, Ezra suffered millions of dollars of damages to him and his family.”
The 47-page complaint details a few examples. One is a purchase of Rubin Resources in 2016. Schoolcraft says he objected to the purchase, but Isner still went through with the purchase on behalf of Pillar Energy despite such moves required approval of 90 percent of membership interests.
“Making matters worse, Jeff engaged in a series of surreptitious actions in order to effectuate the impermissible purchase of Rubin assets and to conceal aspects of that deal from Ezra,” the complaint states. “In order to complete the purchase, Jeff was supposed to deliver a letter of consent that required Ezra’s signature. Ezra never signed that letter or consented to the Rubin purchase. But that did not deter Jeff.
“Regardless of Ezra’s objections, Jeff executed an Asset Purchase Agreement dated July 1, 2016, purportedly on behalf of Pillar Energy. As part of that agreement, Pillar Energy purchased oil and gas wells, as well as other associated assets, from Rubin.”
It says Isner also executed a promissory note reflecting a 15-year balloon payment structure. Isner showed Schoolcraft the note, and Schoolcraft did not consent to it. Still, Isner executed the note.
“Later, Jeff came to know that he could be held personally liable for that Rubin purchase debt due to his execution of the Asset Purchase Agreement and Initial Note without proper authority,” the complaint states. “However, in an effort to induce Ezra not to hold Jeff accountable for Jeff’s impermissible execution of the Rubin purchase, Jeff provided Ezra with what he represented to be the promissory note. …
“Jeff successfully induced Ezra not to hold Jeff personally liable for the debt he created for Pillar Energy by way of the Rubin purchase. Eventually, however, Ezra discovered that the Initial Note was illusory and that Jeff had agreed to different terms, which were deleterious to the business entities.”
The complaint says Pillar was affected by larger oil and gas market pressures in 2020. Pillar decided to defer payments to Rubin as provided under the Initial Note. But Schoolcraft learned Isner had been making payments to Rubin after all. When confronted, Isner agreed to defer the payments. Rubin then sent a default letter and threatened legal action against Pillar.
Isner then was forced to disclose he had executed a different promissory note with Rubin, according to the complaint. Schoolcraft says he learned of the different promissory note despite Isner’s efforts to hide it from him.
Soon after that, the complaint says Isner began “laying the foundation for Ezra’s eventual removal” from the businesses by misrepresenting Schoolcraft’s statements and actions in an effort to paint him in a negative light.”
In 2021, Schoolcraft also learned Isner had been monitoring his email traffic. That meant Isner also could send, receive and delete emails from Schoolcraft’s account.
On March 29, 2021, Schoolcraft received a letter from Isner via Pillar Energy declaring constructive disassociation and breach based on Isner’s fabricated characterizations of Schoolcraft’s words and actions. The complaint says the letter said Schoolcraft was not entitled to any compensation for his shares in Pillar Energy and Pillar Enterprises.
“Jeff intentionally misstated the value of Pillar Energy and Pillar Enterprises, as well as steps taken to assess that value,” the complaint states. “In other words, instead of remitting funds that Ezra was entitled to, including the more than $375,000 in deferred compensation, Jeff arranged for that money to be taken from Ezra with no substantiated justification.”
The complaint also claims Isner continues to negotiate in bad faith and take actions to further harm Schoolcraft.
Schoolcraft accuses Isner of breach of fiduciary duties concerning Pillar Energy, Pillar Enterprises, PBC Energy and Sycamore Midstream as well as aiding and abetting the breach of fiduciary duties, derivative claim for breach of fiduciary duties, breach of contract, conversion, fraud, intentional misrepresentation, unjust enrichment and civil conspiracy.
The complaint also includes a statutory claim for dissociation of Isner from PBC Energy and an alternative statutory claim for dissolution of PBC Energy.
Schoolcraft also seeks compensatory, consequential, punitive and nominal damages as well as pre- and post-judgment interests, court costs, attorney fees, expenses and other relief.
Isner did not return messages seeking comment, and Schoolcraft’s attorney Zak Ritchie declined comment.
He is being represented by Ritchie and Max Gottlieb of Hissam Forman Donovan Ritchie in Charleston. The case has been assigned to Circuit Judge Jennifer Bailey.
Kanawha Circuit Court case number 22-C-910