A former executive at a Carmel-based development firm Mainstreet is suing the company, claiming it terminated him without cause in November to save money as it was going through a financial downturn.
Ned P. Rule, who worked as managing director of investments for the company’s Mainstreet Capital Partners LLC, filed suit in U.S. District Court in Indianapolis.
Mainstreet Capital Partners is a broker-dealer unit that Mainstreet set up in 2015 to develop partnerships with investors and raise money.
Rule said he was given a three-year contract, with a starting salary of $300,000 a year, when he started on Sept. 8, 2015. Mainstreet, the parent company of Mainstreet Health, is a developer and operator of senior care facilities.
The contract, which was attached as an exhibit, guaranteed that Rule would continue to be paid for three years “regardless of any change of control or other company-related matters outside of your control.” The only reason he could be fired was “for cause.”
Rule also was eligible for additional compensation, depending on how much money he raised, with a guaranteed minimum of $550,000 a year.
Rule said he was let go on Nov. 15, 2017, despite getting commendations from his superiors, as the company was “facing a severe financial crisis.”
The complaint, filed March 7, did not provide details on the crisis, but the company has been laying off employees in recent months. Earlier this month, it aborted plans to open four “rapid recovery centers” in Arizona, after spending millions of dollars to build and staff them.
“In an effort to avoid paying on their financial obligations, Defendant Companies were looking to wrongfully terminate certain employees,” Rule’s lawsuit said.
Part of the company’s response to its financial pressures was to shut down Mainstreet Capital Partners, the unit Rule was hired to help run, after just two years.
“The termination of the Mainstreet broker-dealer entity was an act outside of Plaintiff’s control” the complaint said.
According to the suit, Turner instructed several other executives to go through Rule’s employment history with the goal of “looking for information or other basis to terminate Defendant for cause.”
Rule said the executives relayed the order to Rule’s supervisor, Erik Hansen, who “performed a diligent search for cause.”
“No cause to terminate the plaintiff was discovered because none ever existed,” the suit said.
Hansen submitted his findings to the executives, saying he could not locate a basis for the termination of Rule, the complaint said. Nevertheless, the company terminated Rule, and later also terminated Hansen.
Mainstreet stopped making payments to Rule, in violation of his employment contract, the complaint said. Rule said he is still owed $630,989, plus interest.
Named as defendants are Mainstreet and several of its subsidiaries, along with CEO Zeke Turner and two other executives. Turner declined to comment on the case.
The suit claims Mainstreet breached its contract with Rule, and that the defendants committed tortious interference with his contract. Rule is seeking back pay, legal costs, fees and interest.