Q,
8'C.F.R.''214.2(1)(12) prohibits an alien who has spent seven years in a managerial or executive capacity (L1A) or five years in a specialized knowledge capacity (L1B) may not seek an extension or change of status, or be readmitted to the United States in either H or L status, unless the alien has resided and been physically present outside the United States.
Michael Aytes memo clarifies L1 to H1 is not allowed when the beneficiary fully utilized the 5/7 year limit.
http://www.uscis.gov/sites/default/f...1bl1102105.pdf