Xereas v. Heiss ( 2018 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JOHN N. XEREAS,
Plaintiff/Counter-Defendant,
v. Civil Action No. 12-456
DAR
MARJORIE A. HEISS, et al.,
Defendants/ Counter-Plaintiffs.
MEMORANDUM OPINION
Two motions for summary judgment with regard to Plaintiff’s claims in the Second
Amended Complaint (ECF No. 102) have been under advisement, and will be addressed in detail
herein: (1) Defendants’ Motion for Summary Judgment as to the Second Amended Complaint
(ECF No. 142) with the attached Memorandum of Law In Support of Their Motion for Summary
Judgment (“Defs. Mem.”) (ECF No. 142-1) and (2) Plaintiff’s Motion for Partial Summary
Judgment as to the Second Amended Complaint (“Pl.’s Mot.”) (ECF No. 151). After careful
consideration of the parties’ submissions, and for the reasons that follow, the court concluded that
it must grant Defendants’ Motion for Summary Judgment as to Counts IV, VI, IX through XVII,
XXII, XXIII, XXV, and XXVI; deny Defendants’ Motion for Summary Judgment as to Counts I
through III, V, VII, VIII, XVIII, and XIX; deny Plaintiff’s Motion for Partial Summary Judgment;
and dismiss Counts XX through XXII, and XXIV.
I. BACKGROUND
After nearly five years of litigation and extensive discovery, the Plaintiff filed his Second
Amended Complaint on August 22, 2017. See Plaintiff’s Second Amended Complaint (“SAC”)
(ECF No. 102). Plaintiff’s allegations arise out of a business agreement he entered into with
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Defendants Dawson and Heiss in or around 2010. Plaintiff alleges that, since 2005, he trademarked
the use of “Riot Act” in connection with comedy-related services, registered domain names1
related to the name Riot Act, and established business and personal e-mail accounts2 at
“riotactcomedy.com.” See id. at ¶¶ 16, 17. Plaintiff conducted business under the Riot Act name
from 2005 until he and Defendants Dawson and Heiss engaged in a business venture to open a
Riot Act Comedy Club in 2010. See SAC at ¶¶ 18-30.
Plaintiff alleges that he, Defendant Dawson, and Defendant Heiss agreed to launch the Riot
Act Comedy Club, to which, Plaintiff would license the Riot Act trademark and domain names.
See id. at ¶¶ 35-39. Plaintiff Xereas, Defendant Dawson, and Defendant Heiss agreed to
memorialize their planned business relationship and establish a corporate entity. See id. at ¶ 40.
Defendant Heiss prepared an Operating Agreement and Articles of Organization for a Riot Act
DC, LLC, registering the LLC with the District of Columbia on May 6, 2010. See id. at ¶44. In
November of 2010, Plaintiff, Defendant Dawson, and Defendant Heiss entered into an Amended
Operating Agreement. See Plaintiff’s Statement of Undisputed Facts at ¶ 7 (ECF No. 151-2).
Neither the Operating Agreement, nor the Amended Operating Agreement, provided for
the transfer, licensing, or assignment of ownership of the Riot Act trademark and domain names
from the Plaintiff to the LLC. See id. at ¶ 8. Plaintiff attempted to finalize a written licensing
agreement with Defendant Dawson in October of 2011, yet the parties never entered into a written
agreement. See id. at ¶¶ 9-10.
In January of 2012, Defendants Dawson and Heiss each voted to remove Plaintiff from his
day-to-day managerial responsibilities and restricted his access to his Riot Act email account. See
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Such domain names include ““riotactcomedy.com,” “riotactentertainment.com,” “riotactcomedytheater.com,” and
“riotactrecords.com,” “riotactentertainment.com,” and “riotactrecords.com.” See SAC at ¶ 16.
2
For example, Plaintiff’s e-mail account was “johnx@riotactcomedy.com.” See SAC at ¶ 17.
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id. at ¶¶ 15-16. In February of 2012, Plaintiff demanded the LLC cease and desist from any further
use of the Riot Act trademarks and domain names. See id. at ¶ 19. Finally, Defendants Dawson
and Heiss voted to remove Plaintiff as a managing member of the LLC in March of 2012. See id.
at ¶ 20. On March 23, 2012. See generally id.
II. STANDARD OF REVIEW
A. Summary Judgment
The court shall grant summary judgment “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). An issue is genuine if the “evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Whether a fact is material is determined based on whether it might affect the outcome of the suit
under the governing law. Id. The party seeking summary judgment must identify “those portions
of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material
fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
“[A] party opposing a properly supported motion for summary judgment may not rest upon
the mere allegations or denials of his pleading, but . . . must set forth specific facts showing that
there is a genuine issue for trial.” Anderson, 477 U.S. at 248, 256 (internal quotation marks
omitted). “Conclusory allegations without any factual support in the record cannot create a
genuine dispute sufficient to survive summary judgment.” Coates v. Washington Metro. Area
Transit Auth., Civil Action No. 15-02006, 2018 WL 1210861, at *2 (D.D.C. Mar. 8, 2018) (citing
Ass’n of Flight Attendants-CWA, AFL-CIO v. Dep’t of Transp., 564 F.3d 462, 465-66 (D.C. Cir.
2009)). Moreover, where “a party fails to properly support an assertion of fact or fails to properly
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address another party’s assertion of fact,” the district court may, among other actions, “consider
the fact undisputed for purposes of the motion.” Fed. R. Civ. P. 56(e).
When deciding a motion for summary judgment, “[c]redibility determinations, the
weighing of the evidence, and the drawing of legitimate inferences” are not the Court’s role;
instead, the evidence must be analyzed in the light most favorable to the non-movant, with all
justifiable inferences drawn in the non-movant’s favor. Anderson, 477 U.S. at 255; see also
Figueroa v. Tillerson, Civil Action No. 16-00649, 2018 WL 646883, at *4 (D.D.C. Jan. 31, 2018)
(“When deciding a motion for summary judgment, the Court must ‘examine the facts in the record
and all reasonable inferences derived therefrom in a light most favorable to’ the nonmoving
party.”) (quoting Robinson v. Pezzat, 818 F.3d 1, 8 (D.C. Cir. 2016)). “If material facts are
genuinely in dispute, or undisputed facts are susceptible to divergent yet justifiable inferences,
summary judgment is inappropriate.” Coates, 2018 WL 1210861, at *2 (citing Moore v. Hartman,
571 F.3d 62, 66 (D.C. Cir. 2009)). Ultimately, the court must determine “whether the evidence
presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that
one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52. Put another way, the
non-movant must “do more than simply show that there is some metaphysical doubt as to the
material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
“If the evidence is merely colorable, or is not significantly probative, summary judgment may be
granted.” Anderson, 477 U.S. at 249-50 (internal citations omitted).
In addition, Local Rule 7(h), requires “[a]n opposition ... [to include] a separate concise
statement of genuine issues setting forth all material facts as to which it is contended there exists
a genuine issue necessary to be litigated, ... [and] references to the parts of the record relied on to
support the statement,” LCvR 7(h)(1). Federal Rule of Civil Procedure 56(c)(1), similarly requires
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that “[a] party asserting that a fact ... is genuinely disputed must support the assertion by [ ] citing
to particular parts of materials in the record.” Fed. R. Civ. P. 56(c)(1). Local Rule 7(h) “places
the burden on the parties and their counsel, who are most familiar with the litigation and the record,
to crystallize for the district court the material facts and relevant portions of the record.” Williams
v. Court Servs. & Offender Supervision Agency for D.C., 110 F. Supp. 3d 111, 115 (D.D.C. 2015)
(quoting Jackson v. Finnegan, Henderson, Farabow, Garrett & Dunner, 101 F.3d 145, 151
(D.C.Cir.1996)). “Because [LCvR 7(h)] helps the district court maintain docket control and decide
motions for summary judgment efficiently, the D.C. Circuit has repeatedly upheld district court
rulings that hold parties to strict compliance with this rule.” Lockhart v. Coastal Int’l Sec.,
Inc., No. 11-02264, 2013 WL 6571605, at *1, n.2 (D.D.C. Dec. 14, 2013) (internal quotation
marks omitted) (quoting Robertson v. Am. Airlines, Inc., 239 F. Supp. 2d 5, 8 (D.D.C. 2002)).
Plaintiff's counsel's non-compliance with LCvR 7(h)(1) “makes the work of the Court more
onerous.” Said v. Nat'l R.R. Passenger Corp., No. CV 15-1289 (RBW), 2018 WL 3369676, at
*1–2 (D.D.C. July 10, 2018) (citing Lawrence v. Lew, 156 F.Supp.3d 149, 155–56 (D.D.C. 2016));
see generally Plaintiff’s Responses to Defendants’ Statement of Undisputed Facts (ECF No. 152-
1). A party “may not be heard to complain that the district court has abused its discretion by failing
to compensate for” an inadequate effort to file a proper Rule 7(h) statement. Williams v. Court
Servs. & Offender Supervision Agency for D.C., 110 F. Supp. 3d 111, 115 (D.D.C. 2015) (quoting
Jackson, 101 F.3d at 151).
Nonetheless, in the interest of resolving the pending summary judgment motions without
further delay, and because “strong policies favor the resolution of genuine disputes on their
merits,” Jackson v. Beech, 636 F.2d 831, 832 (D.C. Cir. 1980), the court declines to “disregard”
all of the facts and exhibits proffered by Plaintiff, or otherwise deem the Defendant's Statement of
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Undisputed Facts admitted. Rather, the court will consider the Plaintiff's facts and exhibits to the
extent that they are relevant, material, and supported by evidence in the record that is readily
identifiable by the court. See Fed. R. Civ. P. 56(c)(3) (“The court need consider only the cited
materials, but it may consider other materials in the record.”); see also Chambliss v. Nat'l R.R.
Passenger Corp., Civ. Action No. 05-2490 (CKK), 2007 WL 581900, at *2 (D.D.C. Feb. 20, 2007)
(“Despite [the p]laintiff's abject failure to comply with his obligations under Local Civil Rule 56.1
. . ., in the interest of justice, the Court has nevertheless undertaken a review of the record evidence
. . . in order to determine whether that evidence raises genuine issues of fact.”). Furthermore, the
court will make an independent assessment as to whether the facts in the Defendant's Statement of
Undisputed Facts are indeed undisputed by the Plaintiff. See Fed. R. Civ. P. 56(e) (“If a party fails
to properly support an assertion of fact or fails to properly address another party's assertion of fact
. . ., the court may[ ] . . . consider the fact undisputed for purposes of the motion.” (emphasis
added)).
B. Dismissal for Failure to State a Claim
In considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, this
court accepts well-pleaded factual allegations in the complaint as true and interprets them in the
light most favorable to the plaintiff. Howard Univ. v. Watkins, 857 F.Supp.2d 67, 71 (D.D.C.2012)
(citing Warren v. District of Columbia, 353 F.3d 36, 39 (D.C.Cir. 2004)). The motion to dismiss
may be granted where facts alleged in the complaint do not raise a right to relief above the
speculative level, or fail to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see
Henok v. Chase Home Finance, 922 F.Supp.2d 110, 117 (D.D.C. Feb. 13, 2013).
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“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.”
Iqubal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “A pleading that offers ‘labels and
conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’” Id.(quoting Twombly, 550 U.S. at 555). “Nor does a complaint suffice if it tenders ‘naked
assertion[s]’ devoid of ‘further factual enhancement.’” Id. (quoting Twombly, 550 U.S. at 557).
The plausibility “asks for more than a sheer possibility that a defendant has acted
unlawfully.” Id. (quoting Twombly, 550 U.S. at 556–57). “A complaint that pleads facts ‘merely
consistent with’ a defendant's liability, ‘stops short of the line between possibility and plausibility
of entitlement to relief.’” Id.III. DISCUSSION
A. Defendants’ Post-Discovery Declarations
As a preliminary matter, the Plaintiff contends that this court should disregard the post-
discovery declaration Defendants submitted in conjunction with their motion for summary
judgment on the basis of the “sham-affidavit rule.” Plaintiff’s Opposition to Defendants’ Motion
for Summary Judgment (“Pl.’s Opp’n.”) at 3-5 (ECF No. 152). The sham-affidavit rule “precludes
a party from creating an issue of material fact by contradicting prior sworn testimony unless the
‘shifting party can offer persuasive reasons for believing the supposed correction’ is more accurate
than the prior testimony.” Galvin v. Eli Lilly & Co., 488 F.3d 1026, 1030 (D.C.Cir. 2007) (quoting
Pyramid Sec. Ltd. v. IB Resolution, Inc., 924 F.2d 1114, 1123 (D.C.Cir. 1991)) (emphasis added).
However, “[i]f the supplemental affidavit [or declaration] does not contradict but instead clarifies
the prior sworn statement, then it is usually considered admissible.” Id. It then follows that Courts
in this district have applied the sham-affidavit rule when “the affidavit [or declaration] . . . clearly
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contradict[s] prior sworn testimony, rather than clarif[ies] confusing or ambiguous testimony, and
the contradiction lacks credible explanation.” St. Paul Mercury Ins. Co. v. Capitol Sprinkler
Inspection, Inc., 573 F.Supp.2d 152, 160 (D.D.C. 2008) (quoting Hinch v. Lucy Webb Hayes Nat'l
Training Sch., 814 A.2d 926, 930 (D.C. 2003)) (emphasis added).
Here, Plaintiff argues that these declarations should not be part of the record because they
contradict the declarant’s earlier testimony. Pl.’s Opp’n at 3. However, Plaintiff points to no
contradictory testimony put forth by the Defendants. Instead, Plaintiff reasons that the sham-
affidavit rule applies because “defendants have provided absolutely no evidentiary support.” Id.
at 4. For example, Plaintiff points out that Defendant Dawson’s declaration states, “I never had
the LLC reimburse me for expenses that were unrelated to Riot Act LLC” and “I did nothing to
trick Mr. Xereas into making his investment.” Id. Plaintiff contents that there is no corroborating
evidence for these statements, and thus qualifies as a sham affidavit. Id. Plaintiff fails to address
how these statements contradict prior sworn testimony, as required by the sham-affidavit rule.
While an ambiguity exists attributable to the lack of “receipts, invoices, or other documents,”
Defendant Dawson’s declaration does not clearly contradict prior testimony. Accordingly, the
court will consider the declarations submitted by the Defendants as part of the record.
B. Plaintiff’s Derivative Claims
To adequately bring a derivative action a plaintiff must allege, inter alia: “with particularity
the efforts made by the plaintiff to obtain the action the plaintiff desires from the directors, and the
reasons for the plaintiff's failure to obtain the action or for not making the effort. Saunders v.
Hankerson, 312 F. Supp. 2d 46, 67 (D.D.C. 2004) (quoting Fed. R. Civ. P. 23.1); see also Levant
v. Whitley, 755 A.2d 1036, 1049–50 (D.C. 2000) (interpreting identical local rule). A plaintiff
must also “fairly and adequately represent the interests of the . . . members similarly situated in
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enforcing the right of the corporation or association.” Id. “[F]actors such as ‘economic
antagonism’ and the ‘use of the derivative action as leverage in a corporate or associational
struggle’ may render a particular plaintiff an inappropriate representative in a Rule 23.1 action.”
Saunders, 312 F. Supp. 2d at 69. Though this court finds, for the reasons offered by Plaintiff, that
Plaintiff’s demand on Defendants Dawson and Heiss would have been futile, the nature of
Plaintiff’s derivative claims lead this court to believe that these derivative claims act as leverage
in Plaintiff’s associational struggle with Defendants Dawson and Heiss.3 See, e.g., Wall St. Sys.,
Inc. v. Lemence, 04-CIV-5299 (JSR), 2005 WL 292744, at *3 (S.D.N.Y. Feb. 8, 2005) (“an
individual shareholder has a conflict of interest . . . when he simultaneously brings a direct and
derivative action.”). Therefore, the court grants summary judgment for the Defendants as it
pertains to Plaintiff’s derivative claims, in accordance with the discussion below.
C. The Motion for Summary Judgment
1. The Lanham Act Claims
The Plaintiff first brings claims for trademark infringement, unfair competition, and
cybersquatting. See SAC ¶¶ 244-56, 352-56. In support of his trademark infringement and unfair
competition claims, Plaintiff contends that, because the Riot Act name “appears on the LLC’s
certificate of occupancy and ABRA license,” the undisputed facts show that there is a “substantial
likelihood of confusion,” between the Plaintiff’s mark and the Defendants’ use of the mark. Pl.’s
Opp’n. at 6-7. Defendants’ contend that this use of the Riot Act name does not constitute
3
It is also unclear to the Court whether Plaintiff’s counsel even represents, or proports to represent, derivative
plaintiff. See Notice of Appearance by Ishai Mooreville, (ECF No. 123); Motion for Leave for Erin Glavich to
Appear Pro Hac Vice, (ECF No. 122); Notice of Appearance by Amber L. McDonald, (ECF No. 66); Motion for
Leave for Tony C. Richa to Appear Pro Hac Vice, (ECF No. 38); Notice of Substitution of Counsel by W. Todd
Miller, (ECF No. 25).
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commercial use of the Riot Act mark. Defendants’ Reply in Support of Summary Judgment
(“Defs.’ Reply”) at 4 (ECF No. 156).
To prove trademark infringement, the Plaintiff must show that “(1) [he] owns a valid
trademark, (2) [his] trademark is distinctive or has acquired a secondary meaning, and (3) there is
a substantial likelihood of confusion between the party’s mark and the alleged infringer’s mark.”
Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumb, 69 F.Supp.3d 175, 201 (2014)
(citing Globalaw Ltd. v. Carmon & Carmon Law Office, 452 F.Supp.2d 1, 26 (D.D.C.2006)). The
undisputed facts show that Plaintiff originally owned the mark, yet relinquished its use to the LLC
until at least the beginning of 2012. See Pl.’s Opp’n. at 6. It is also undisputed that the trademark
name is distinctive. See Pl.’s Mot. at 5-6. Thus, the only issue presented is whether there is a
substantial likelihood of confusion between the Plaintiff’s Riot Act trademark and the Defendant’s
use of the Riot Act name on the certificate of occupancy and the ABRA license.
To ascertain the likelihood of confusion, any of the following factors may apply:
(1) the strength of the plaintiff's mark; (2) the degree of similarity between the two marks;
(3) the proximity of the products; (4) evidence of actual confusion; (5) the defendants’
purpose or reciprocal of good faith in adopting its own mark; (6) the quality of defendants’
product; and (7) the sophistication of the buyers.
Partido Revolucionario Dominicano (PRD) v. Partido Revolucionario Dominicano, 312 F. Supp.
2d 1, 14 (D.D.C. 2004). Ultimately, to grant summary judgment, the court must ascertain whether
“the ordinary person who is neither savant nor dolt, and who exercises a normal measure of the
layman's common sense and judgment,” A1 Mortg. Corp. v. A1 Mortg. and Financial Services,
LLC, 2006 WL 1437744, *8 (W.D. Pa. 2006), would be confused by the Defendants’ use of the
Riot Act trademark.
Taking into account all of the factors, a genuine issue of material fact exists as to whether
there is a substantial likelihood of confusion between the Plaintiff’s trademark and the LLC’s use
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of the Riot Act name. Plaintiff’s use of the mark is long standing, dating back to use in a prior
venue since 2005, and was used in a similar fashion as intended at the formation of the LLC. See
Pl.’s Mot. at 6. Plaintiff contends that the Defendants’ use of the mark on the certificate of
occupancy and ABRA license may lead a consumer to believe that the Riot Act name is affiliated
with the LLC. See id. Defendant, however, contends that the display of the Riot Act name on
government documentation does not rise to the level of “commercial use.” Defs.’ Reply at 4-5.
Cases cited by the Defendants are inapposite. See id. Those cases do not address the use and
display of an infringing mark. Though the facts, as put forth by the parties, appear undisputed at
the outset, they are susceptible to divergent, yet justifiable, inferences. See Coates, 2018 WL
1210861, at *2. Therefore, Defendants’ Motion for Summary Judgment as to Counts I, II, III, and
Plaintiff’s Motion for Summary Judgment as to Counts I and II are both denied.
Similarly, for Plaintiff to succeed on his cybersquatting claim, he must demonstrate that:
“1) [his] trademark is a distinctive or famous mark entitled to protection; (2) Defendants' domain
name is identical or confusingly similar to the Plaintiff's mark; and (3) Defendants ‘register[ ],
traffic[ ] in, or use[ ]’ a domain name with the bad faith intent to profit from it. Hanley-Wood LLC
v. Hanley Wood LLC, 783 F. Supp. 2d 147, 152 (D.D.C. 2011) (quoting 15 U.S.C. §
1125(d)(1)(A)). “In determining whether a person has acted with bad faith, the Court may consider
such factors as . . . whether the person has previously used the name to offer goods or services for
sale, and whether the person intended to divert consumers from the infringed owner's website
either for commercial gain or to tarnish or disparage the mark by creating a likelihood of confusion
as to the source or sponsorship of the site.” Id. (citing 15 U.S.C. § 1125(d)(1)(B)).
The Plaintiff has identified a genuine issue of material fact pertaining to the cybersquatting
claim that prevents this court from granting summary judgment: whether the defendants had the
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requisite bad faith intent to profit from the Riot Act domain. Plaintiff argues that the Defendants
acted in bad faith when they allegedly exceeded their authorized use of the Riot Act domains after
the Plaintiff’s removal as a managing member. See Pl.’s Opp’n at 10. Defendants response simply
contends that “Defendants had permission to use the domains as long as he was affiliated with the
business,” to which Plaintiff remains a 25% business owner. Defs.’ Reply at 7. Whether the
Defendants had the requisite intent to infringe on the Plaintiff’s domains for commercial gain is a
question of fact that cannot be decided at the summary judgment stage. Thus, the Defendants’
Motion for Summary Judgment and the Plaintiff’s Motion for Summary Judgment as to Count
XIX is denied.
2. The Conversion Claim
The Plaintiff asserts a conversion claim against all Defendants. 4 See SAC ¶¶ 257-66. In
support of this claim, he asserts that he “terminat[ed] any trademark license,” and Defendants
subsequently “disclaim[ed] any licensing rights they may have had.” Plaintiff’s Opp'n at 11.
Plaintiff further asserts that the Defendants “store or effectively gave away $348,262 of company
funds,” disbursed $3,128,502 “to third parties lack[ing] documentation sufficient to deminstate
that the expenses were directly attributable to Penn Social,” and incurred $893,201 “in LLC credit
card charges lack[ing] sufficient documentation to demonstrate that the expenses were directly
attributable to Penn Social.” Id. at 12-13. His conversion claim is legally flawed.
Defendants argue that these claims are ripe for dismissal at summary judgment because
Plaintiff licensed the use of the Riot Act trademark and websites while he was continually affiliated
with the LLC. Defs.’ Mem. at 27. Therefore, because Plaintiff remains affiliated with the LLC,
4
Plaintiff also brings this claim as a derivative plaintiff.
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the license to use the name remains. Id. Defendants also argue that the conversion claims cannot
be supported by alleged improper use of company funds. Id.
According to District of Columbia common law, a conversion claim exists when there is
“an unlawful exercise of ownership, dominion, and control over the personality of another in denial
or repudiation of his right to such property.” Headfirst Baseball LLC v. Elwood, 168 F. Supp. 3d
236, 251–52 (D.D.C. 2016) (quoting Wash. Gas Light Co. v. Public Serv. Comm'n of D.C., 61
A.3d 662, 675 (D.C.2013)). When money is the subject of a conversion claim, Plaintiff must show
that he “has the right to a specific identifiable fund of money.” Id. (quoting McNamara v. Picken,
950 F.Supp.2d 193, 194 (D.D.C.2013).
Here, the undisputed facts show that Plaintiff has not identified a specific fund of money
that Defendants Dawson and Heiss converted—he plainly contends that funds were either
converted from the LLC for personal use or are otherwise unaccounted for. See Pl.’s Opp’n. at
12-13. As a basis for a conversion claim, this contention fails as a matter of law. See McNamara
v. Picken, 950 F.Supp.2d 193, 195 (D.D.C. 2013) (recognizing that “fungible cash is precisely the
type of fund that may not underlie a claim for conversion” and granting summary judgment on
conversion claim where plaintiff could not identify the “exact funds” that went into the partnership
and were misappropriated, and instead, only argued that “general partnership funds ... were
misdirected” for other purposes). And the same is the case concerning the alleged unauthorized
use of the LLC’s credit. See Campbell v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 130 F. Supp.
3d 236, 258–59, 259–60, 2015 WL 5449791, at *14, *15 (D.D.C.2015) (dismissing conversion
claim and recognizing “that overcharges or unauthorized charges to a credit card cannot support a
conversion claim because such allegations do not call for the return of specific money”).
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As applied to the trademark and domain names, the availability of a conversion claim is
limited to tangible property not presented here. See Kaempe v. Myers, 367 F.3d 958, 964 (D.C.
Cir. 2004) (“an action for conversion of intangible property will lie only where such property is
merged in a transferrable document and the document itself is converted.”); see also Xereas v.
Heiss, 933 F. Supp. 2d 1, 6-7 (D.D.C. 2013) (dismissing Plaintiff’s claim for conversion of
trademarks and domain names because they constitute intangible property that were not alleged to
have “merged in any tangible documents which were transferred to the defendants.”). Plaintiff has
failed to put forth, and, in light of LCvR 7(h), the court is hard-pressed to find, any evidence in the
record that the trademarks and domain names allegedly licensed to the Defendants was merged
into any tangible document that was transferred to the defendants. Therefore, the court grants
summary judgment for the Defendants on count IV of the Second Amended Complaint.
Accordingly, Plaintiff’s Motion for Summary Judgment as to Count IV is denied.
3. Breach of Contract and of the Covenant of Good Faith and Fair Dealing Claims
Plaintiff asserts breach of contract claims and claims for breach of the covenant of good
faith and fair dealing, arising from both his removal as managing member and for the use of the
Riot Act trademarks and domain names.5 See SAC at 267-85. A claim for breach of contract
requires: “(1) a valid contract between the parties; (2) an obligation or duty arising out of the
contract; (3) a breach of that duty; and (4) damages caused by breach.” Xereas, 933 F. Supp. 2d
at 8 (quoting Tsintolas Realty Co. v. Mendez, 984 A.2d 181, 187 (D.C. 2009)). Further, a breach
of the duty of good faith and fair dealing exists where a party “(1) evades the spirit of the contract,
(2) willfully renders imperfect performance, or (3) interferes with performance by the other party.”
5
Plaintiff brings Count VI and VIII as a derivative plaintiff.
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C & E Servs., Inc. v. Ashland Inc., 601 F.Supp.2d 262, 276 (D.D.C. 2009) (citing Allworth v.
Howard Univ., 890 A.2d 194, 201 (D.C.2006)).
Plaintiff has raised a genuine issue of material fact as to whether a breach of contract
occurred when he was removed as managing member. Defendants argue that they were wholly
within their rights to remove Plaintiff as a managing member under Section 6.3 of the Operating
Agreement for “ceas[ing] to devote such time and efforts to the business and affairs of the
Company as is reasonably necessary to promote and maintain adequately the interests of the
company,” when the Plaintiff filed suit against the company and reduced his efforts. Defs.’ Mem.
at 18. However, Plaintiff has put forth evidence in the record that he continued his duties and
devotion to the LLC. See Pl.’s Opp’n. at 14. To the extent that the Defendants’ argue that
Plaintiff’s Superior Court lawsuit justified his removal, Defendants cite no legal authority to
support their legal proposition that this would justify his removal as a matter of law. Thus, the
court finds that a genuine issue exists as to whether Defendants’ breached the Amended Operating
Agreement.
Defendants’ further contend that Plaintiff suffered no damages resulting from any alleged
breach of contract, because (1) his shares in the company remained, (2) he retained his right to
profits, and (3) failure to pay Plaintiff a salary cannot be a breach because the parties contracted
to compensation via managing member discretion. See Defs.’ Mem. at 19. Though it appears that
the Plaintiff concedes Defendants’ third point, Plaintiff points out that the removal of Plaintiff as
managing member subsequently resulted in discontinuing the LLC venue as a comedy club. See
Pl.’s Opp’n. at 16. Therefore, a genuine issue of material fact exists pertaining to damages.
Additionally, a genuine issue of material fact exists as to whether a licensing agreement
for the Riot Act trademarks and domains existed between the parties. “A valid contract requires
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‘both (1) agreement as to all material terms; and (2) intention of the parties to be bound.’” Xereas,
933 F. Supp. 2d at 9 (quoting Duk Hea Oh v. Nat'l Capital Revitalization Corp., 7 A.3d 997, 1013
(D.C.2010)). Plaintiff has put forth evidence that a jury could reasonably infer that an agreement
to license the Riot Act trademarks and domain names to the LLC for compensation, and subsequent
intent to be bound. See Pl.’s Opp’n. at 16-17.
Moving to the claim for breach of the implied covenant of good faith and fair dealing,
Plaintiff has shown that a genuine issue of material fact exists. Plaintiff puts forth evidence from
which a reasonable juror might infer that the Defendants’ acted in bad faith when removing
Plaintiff as a managing member of the LLC. See Pl.’s Opp at 18. Because genuine issues of fact
exist regarding alleged breach of contract and breach of the implied covenant of good faith and
fair dealing as it pertains to the Amended Operating Agreement, and for the breach of contract as
it pertains to the alleged licensing agreement, Defendants’ Motion for Summary Judgment as to
Counts V, VII, and VIII is denied. For the reasons discussed in section III(B), supra, the court
grants summary judgment for the Defendants as to Count VI.
4. The Fraud Claims
The Plaintiff asserts various fraud-based allegations against the Defendants. These claims
arise from the alleged efforts by Defendants to fraudulently induce Plaintiff into a business
relationship with promises to pay him wages, to make him the “face” of the business, and that he
would retain ownership of his trademarks and web domains. See SAC at ¶¶ 286-306.
In support of summary judgment, Defendants argue that any allege false statements cannot
be considered material facts because they were not ultimately included in the Amended Operating
Agreement. See Defs.’ Mem. at 17-18; Defs.’ Reply at 7. Defendants further contend that Plaintiff
suffered no provable damages, because his investment has increased in value. See Defs.’ Reply at
16
8-9. Plaintiff disputes Defendants’ two arguments. First, he argues that he relied on Defendants’
allegedly false assurances that “we’re all a team” that would collectively act “for the same
purpose.” See Pl.’s Opp’n. at 19-20. Second, he argues that the law requires damages and injury,
not “lack of any profit.” Id. at 20.
To prove fraud under District of Columbia Common Law, the plaintiff is required to show:
(1) the defendants made a false representation; (2) in reference to a material fact; (3) with
knowledge of its falsity; (4) with the intent to deceive the plaintiff; (5) the plaintiff acted in
reasonable reliance on that representation; (6) which consequently resulted in provable damages.
See, e.g., Intelsat USA Sales Corp. v. Juch-Tech, Inc., 24 F. Supp. 3d 32, 46–47 (D.D.C. 2014)
(citing Hercules & Co. v. Shama Rest. Corp., 613 A.2d 916, 923 (D.C. 1992)). Accordingly, “the
elements of fraud and fraudulent inducement are the same.” Xereas v. Heiss, 933 F. Supp. 2d 1,
10 (D.D.C. 2013) (citing In re U.S. Office Prod. Co. Sec. Litig., 251 F.Supp.2d 77, 100
(D.D.C.2003)).
Additionally, the elements of negligent misrepresentation are similar to those of a common
law fraud claim, except that negligent misrepresentation “do[es] not include the scienter
requirements of a fraud claim.” Intelect Corp. v. Cellco P'ship GP, 160 F. Supp. 3d 157, 186
(D.D.C. 2016) (quoting Parr v. Ebrahimian, 774 F.Supp.2d 234, 240 (D.D.C.2011)); see Sundberg
v. TTR Realty, LLC, 109 A.3d 1123, 1131 (D.C.2015) (“a complaint alleging negligent
misrepresentations need not allege that the defendant had knowledge of the falsity of the
representation or the intent to deceive.”).
Finally, “a constructive fraud claim also includes all the same elements as actual fraud
except the intent to deceive.” Intelect Corp., 160 F. Supp. 3d at 186–87 (quoting Cordoba
Initiative Corp. v. Deak, 900 F.Supp.2d 42, 50 (D.D.C.2012)); see also Himmelstein v. Comcast
17
of the Dist., L.L.C., 908 F. Supp. 2d 49, 59–60 (D.D.C. 2012). In addition to those elements, a
constructive fraud claim also “requires a plaintiff to demonstrate the existence of a confidential
relationship between the plaintiff and defendant, ‘by which the defendant is able to exercise
extraordinary influence over plaintiff.’” Id. (quoting McWilliams Ballard, Inc. v. Broadway Mgmt.
Co., 636 F.Supp.2d 1, 6 n. 7 (D.D.C.2009)).
Plaintiff’s allegations, insofar as they are supported by any evidence in the record, fall short
of establishing the necessary elements of fraud. At most, Plaintiff has demonstrated that he relied
(albeit without justification for so relying) upon Defendants’ suggestion that the three managing
members “were all a team” that would collectively act “for the same purpose.” See ECF No. 148-
12. Opinions, predictions, and hopes for the future “do not constitute representations of material
fact upon which a plaintiff successfully may place dispositive reliance.” Howard v. Riggs Nat.
Bank, 432 A.2d 701, 706 (D.C. 1981). Here—the first element of fraud—is where Plaintiff’s
claims fails. Plaintiff points to no evidence in the record that he relied on Defendants’ allegedly
false representations regarding trademark ownership, guaranteed salary, and being the “face” of
the business to support his fraud claims. To the contrary, the representation that Plaintiff argues
he relied on—that Defendants Heiss and Dawson assured him they were “all a team”—merely
constitutes Defendants’ opinion or aspiration for their future business relationship. What it does
not constitute is a false representation of a material fact on which he could have relied. Plainly,
Plaintiff fails to refute Defendants’ argument that they made a false representation in reference to
a material fact. Because there is no genuine issue of material fact regarding the first element of
fraud, the court need not reach the other elements of fraud, negligent misrepresentation,
18
conspiracy6 to defraud, or constructive fraud. Therefore, Defendants’ Motion for Summary
Judgement as to Counts IX through XII is granted.
5. The Claims Brought Under the ECPA and the SCA
Plaintiff asserts claims against all Defendants for unauthorized interception and disclosure
of electronic communications under the Electronic Communications Privacy Act (“ECPA”), in
addition to a claim for unlawful access to stored communications under the Stored
Communications Act (“SCA”). See SAC at ¶¶ 311-26; see also 18 U.S.C. §§ 2511(1)(a), (1)(c);
18 U.S.C. § 2701(a).
Defendants argue that the undisputed facts do not support Plaintiff’s ECPA and SCA
claims. See Defs.’ Mem. at 21. Defendants contend that the factual record shows that Plaintiff
gave the LLC permission to access, control, and develop the website and email accounts. Id.Defendants further contend that these were company email accounts maintained on LLC serves,
and not private email accounts. Id. Finally, Defendants contend that, to the extent that Defendants
accessed Plaintiff’s company email account, it was for the purpose of conducting company
business after “Plaintiff substantially curtailed his day-to-day involvement with the LLC.” Id.Plaintiff argues that Defendants violated the ECPA and SCA by gaining unauthorized
access to, and proceeding to send emails from, his Riot Act email account. Pl.’s Opp’n. at 20-21.
In support of these claims, Plaintiff contends that he retained ownership of the Riot Act domain
names, and that his “longstanding” Riot Act email was used for personal emails, including emails
to his attorney. Id. Therefore, plaintiff argues that Defendant’s access of Plaintiff’s Riot Act email
account is a violation of the ECPA and the SCA. Id. In doing so, Plaintiff supports his legal
6
Conspiracy “is not an independent tort but only a means for establishing vicarious liability for an underlying tort.”
Xereas v. Heiss, 933 F. Supp. 2d 1, 10 (D.D.C. 2013) (quoting Hill v. Medlantic Health Care Grp., 933 A.2d 314,
334 (D.C.2007)).
19
conclusions with conclusory citations to the ECPA and SCA, devoid of a single case citation
supporting his legal propositions. See id. Nonetheless, this court proceeds to determine whether
there is a genuine issue of material fact on which these claims can survive summary judgment.
The SCA creates a civil cause of action for damages against “whoever—(1) intentionally
accesses without authorization a facility through which an electronic communication service is
provided; or (2) intentionally exceeds authorization to access that facility; and thereby obtains,
alters, or prevents authorized access to a wire or electronic communication while it is in electronic
storage in such system[.]” 18 U.S.C. § 2701(a). Such conduct is not a violation of the SCA,
however, if authorized “by the person or entity providing a wire or electronic communications
service.” Id. § 2701(c). Several Courts have held, and this court agrees, that a private company
providing an “electronic communication service” to its employees can provide such authorization.
See, e.g., Council on Am.-Islamic Relations Action Network, Inc. v. Gaubatz, 793 F. Supp. 2d 311,
334 (D.D.C. 2011) (collecting cases); Shefts v. Petrakis, 758 F. Supp. 2d 620, 635 (C.D. Ill. 2010)
(Denying summary judgment for the Plaintiff where Defendant “was authorized under the
Employee Manual to access and monitor Plaintiff’s communications.”).
Viewing the facts in a light most favorable to the Plaintiff, the parties do not dispute that
Plaintiff provided Squiid, Inc. with permission to transfer the control of the email domains to the
LLC. See Pl. Opp’n. at 20. Further evidencing control, Plaintiff has not produced evidence to
dispute the fact that the LLC “paid for the email accounts [that] were maintained on LLC servers.”
Defs.’ Mem. at 21. The Defendants therefore have proffered evidence that the LLC maintained
control of “a facility through which an electronic communication service is provided[,]” 18 U.S.C.
20
§ 2701(a), regardless of whether Plaintiff maintained intangible property ownership of the Riot
Act domain names.7
Once Defendants challenged the factual basis for Plaintiff’s SCA claim, Plaintiff had the
affirmative burden to produce evidence from which a reasonable jury could find that Defendants
gained unauthorized access to Plaintiff’s emails in “electronic storage.” See Celotex Corp., 477
U.S. at 322 (“Rule 56(c) mandates the entry of summary judgment . . . against a party who fails to
make a showing sufficient to establish the existence of an element essential to that party's case,
and on which that party will bear the burden of proof at trial.”). Plaintiff has proffered only
speculation, see Pl. Opp’n. at 21 (citing Ex. K), and not any facts that would allow a reasonable
fact finder to make the required findings. See Coates, 2018 WL 1210861 at *2 (“[c]onclusory
allegations without any factual support in the record cannot create a genuine dispute sufficient to
survive summary judgment.”). Because the LLC “is the provider of the ‘service,’ neither it nor its
employees can be liable under § 2701.” Bohach v. City of Reno, 932 F. Supp. 1232, 1236 (D. Nev.
1996).
Further, the ECPA creates a civil cause of action against persons who “intercept” electronic
communications. See 18 U.S.C. § 2511; see also Pure Power Boot Camp v. Warrior Fitness Boot
Camp, 587 F. Supp. 2d 548, 556 (S.D.N.Y. 2008); Fraser v. Nationwide Mut. Ins. Co., 352 F.3d
107, 113-14 (3d Cir. 2003), as amended (Jan. 20, 2004) (holding that defendant did not “intercept”
plaintiff’s email located on defendant’s server because the company did not access email at initial
transmission). The Defendants contend, and the Plaintiff fails to refute with evidence in the record,
7
Further, the factual record is devoid of evidence that Defendants accessed emails in “electronic storage” as defined
by the SCA. See Hilderman v. Enea TekSci, Inc., 551 F. Supp. 2d 1183, 1205 (S.D. Cal. 2008); Hately v. Watts, 309
F. Supp. 3d 407, 411 (E.D. Va. 2018) (granting summary judgment where plaintiff failed to produce evidence that
Defendant accessed plaintiff’s unopened emails).
21
that Defendants simply reviewed stored emails, and did not “intercept” emails currently in transit
at the time of the alleged conduct.
Based on this record, Plaintiff has failed to establish, as a matter of law, that Defendants
exceeded their authorized access of Plaintiff’s Riot Act email account under § 2510(17)(A) or
otherwise intercepted Plaintiff’s Riot Act emails under §§ 2511(1)(a), (1)(c). Therefore, the
Defendants’ Motion for Summary Judgment as to Counts XIII through XV of the Second
Amended Complaint is granted. Accordingly, Plaintiff’s Motion for Summary Judgment as to
Count XIII is denied as moot.
6. The Claims for Misappropriation of Trade Secrets and for Intentional
Interference with Business Relations
Plaintiff also brings claims for the misappropriation of trade secrets and for intentional
interference with business relations.8 See SAC at ¶¶ 327-45 (emphasis added). Regarding the
misappropriation of trade secrets allegation, Defendants argue that Plaintiff cannot “make out a
claim” for misappropriation because a list of contacts and social media accounts does not qualify
as trade secrets. Defs.’ Mem. at 28 (citing Council on American-Islamic Relations Action Network
Inc. v. Gaubatz, 82 F.Supp.3d 344 (D.D.C. 2015) (list of donors not a trade secret and no showing
of harm from disclosure)). Because Plaintiff has not addressed this argument in response, this
court will consider that argument conceded and will enter judgment in favor of the Defendants.
See Franklin v. Potter, 600 F.Supp.2d 38, 60 (D.D.C.2009) (treating defendant's argument in
motion for summary judgment as conceded where plaintiff failed to address it in his response).
Under D.C. law, intentional interference with a prospective business relation requires the
Plaintiff to show evidence of “(1) the existence of a valid business relationship or expectancy, (2)
8
Plaintiff also brings Count XVII as a derivative plaintiff.
22
knowledge of the relationship or expectancy on the part of the interferer, (3) intentional
interference inducing or causing a breach or termination of the relationship or expectancy, and (4)
resultant damages.” Command Consulting Grp., LLC v. Neuraliq, Inc., 623 F. Supp. 2d 49, 51–
52 (D.D.C. 2009) (quoting Browning v. Clinton, 292 F.3d 235, 242 (D.C.Cir.2002). The Plaintiff
“must make a ‘strong showing of intent’ to disrupt a business relationship or expectancy to
establish a claim for interference. Id. (quoting Bennett Enters. v. Domino's Pizza, Inc., 45 F.3d
493, 499 (D.C.Cir.1995) (noting that “a general intent to interfere or knowledge that conduct will
injure the plaintiff's business dealings is insufficient to impose liability”)).
Though Plaintiff raises an issue of material fact, including whether any business
relationships existed, plaintiff fails to sufficiently refute Defendants’ argument that they were not
aware of any specific prospective business relation they were interfering with. See Defs.’ Mem.
at 28. Defendants further add, and the Plaintiff fails to refute, that Defendants “would have
provided his email password to him had he requested it.” See Defs.’ Reply at 15. Therefore,
Defendants’ Motion for Summary Judgment as to Counts XVI and XVII is granted.
7. The Unjust Enrichment and Quantum Meruit Claims
Plaintiff brings claims for unjust enrichment and quantum meruit.9 See SAC at ¶¶ 346-51,
385-85. Plaintiff’s unjust enrichment claims are based on the alleged licensing of the Riot Act
trademarks to the LLC without receiving compensation. See Pl.’s Opp’n. at 17, 24-25. Since these
causes of action are alternative remedies, the court considers these remedies together.
Regarding the unjust enrichment claim, Defendants argue that the Plaintiff received
financial benefit for his work, and further that the existence of the Amended Operating Agreement
precludes recovery. See Defs.’ Mem. at 29. Defendants’ additionally argue that the quantum
9
Plaintiff also brings Count XVIII as a derivative plaintiff.
23
meruit claim should be dismissed for failure to state a claim upon which relief can be granted. See
id. at 33-34.
As a preliminary matter, the Plaintiff’s claim for quantum meruit in the complaint is based
on Plaintiff allegedly “render[ing] valuable services to the LLC in his role as General Manager,
working tirelessly and often working 20 hour days and sleeping at the Venue.” SAC at ¶383.
Plaintiff further alleges that “the services provided by Plaintiff were accepted, used, and enjoyed
by the LLC under circumstances that reasonably notified the LLC that Plaintiff expected to be
paid.” Id. at ¶ 384. However, in his opposition, Plaintiff attempts to argue that summary judgment
is precluded on his quantum meruit claim because “Plaintiff provided a valuable service (use of
his trademark) to Defendants, from whom recovery is sought. Defendants accepted and enjoyed
use of the RIOT ACT name – and continue to do so to this day – and it was plain that Plaintiff
expected to be compensated for such use.” Pl.’s Opp’n. at 17, n.7. “[A] plaintiff may not amend
his complaint through his opposition papers.” Bigwood v. U.S. Agency for Int'l Dev., 484 F. Supp.
2d 68, 71 (D.D.C. 2007) (citing Doe I v. State of Israel, 400 F.Supp.2d 86, 100 (D.D.C.2005)).
The court therefore only considers the quantum merit claim as it pertains to the compensation for
his work for the LLC. Because Defendants squarely addressed these allegations, and because
Plaintiff has not, the court will consider the claim for quantum meruit conceded and summary
judgment granted in favor of the Defendants as to Count XXIII. See Franklin v. Potter, 600
F.Supp.2d 38, 60 (D.D.C.2009) (treating defendant's argument in motion for summary judgment
as conceded where plaintiff failed to address it in his response).
With respect to the unjust enrichment claim, a party states a cognizable claim for unjust
enrichment when: “(1) the plaintiff conferred a benefit on the defendant; (2) the defendant retains
the benefit; and (3) under the circumstances, the defendant’s retention of the benefit is unjust.”
24
Peart v. District of Columbia Hous. Auth., 972 A.2d 810, 813 (D.C. 2009). (quoting News World
Communic’ns, Inc. v. Thompsen, 878 A.2d 1218, 1222 (D.C. 2005)). When these elements are
met, “the recipient of the benefit has a duty to make restitution to the other person if the
circumstances of its receipt or retention are such that, as between the two persons, it is unjust for
the recipient to retain it.” Vila v. Inter-Am. Inv. Corp., 83 F. Supp. 3d 85, 90 (D.D.C. 2015)
(quotations omitted).
Defendants argument for summary judgment is based in compensation for the Plaintiff’s
work for the LLC. See Defs.’ Mem. at 29. However, in accordance with the complaint, Plaintiff
correctly points out that a genuine issue of material fact exists over whether the plaintiff conferred
a benefit on the LLC through allegedly licensing the Riot Act trademarks, and whether that benefit
was unjust when Plaintiff “never received a cent for the use of his mark.” Pl.’s Opp’n. at 24-25
(emphasis added).
Here, while contracts existed between Plaintiff Xereas, Defendant Dawson, and Defendant
Heiss for Plaintiff’s salary and compensation, there was no written contract between the relevant
parties to the use of the Riot Act trademarks: Plaintiff and the LLC. See Pl.’s Opp’n. at 24-25
(citing Ex. P). Thus, the existence of another contract will not bar Plaintiff’s unjust enrichment
claim, and the court will deny summary judgment as to Count XVIII allow this claim to proceed.
8. The Civil RICO Claim
Plaintiff brings a civil RICO claim pursuant to 18 U.S.C. § 1962 and a civil conspiracy
claim under District of Columbia common law. 10 See SAC at ¶¶ 389-95. In support of their
motion, Defendants argue that no evidence of racketeering activities exist and that, to the extent
RICO predicates exist, they were not the proximate cause of Plaintiff’s injuries. Defs.’ Mem. at
10
Plaintiff also brings these claims as a derivative plaintiff.
25
25-26. In response, Plaintiff contend that the Defendants engaged in the following predicate acts:
(1) wire fraud, evidenced by the alleged misappropriation of the LLC’s assets; (2) unauthorized
interception, access, and disclosure of Plaintiff’s emails, and (3) tax fraud. Pl.’s Opp’n. at 22-23.
A claim for the violation of civil RICO requires “(1) the conduct (2) of an enterprise (3)
through a pattern of racketeering activity.” Salinas v. United States, 522 U.S. 52, 62 (1997); see
18 U.S.C. § 1962(c). A “[p]attern of racketeering activity” requires at least two acts of
“racketeering activity,” or “predicate acts.” Id.; see 18 U.S.C. § 1961(5). It is axiomatic that, “a
plaintiff may not amend his complaint through his opposition papers.” Bigwood v. U.S. Agency
for Int'l Dev., 484 F. Supp. 2d 68, 71 (D.D.C. 2007) (citing Doe I v. State of Israel, 400 F.Supp.2d
86, 100 (D.D.C.2005)). When the predicate acts are based in fraud, as all of the presently alleged
predicate acts are, they are subject to the heightened pleading standard of Rule 9(b). Cheeks v.
Fort Myer Constr. Corp., 216 F. Supp. 3d 146, 157 (D.D.C. 2016), aff'd, 728 F. App'x 12 (D.C.
Cir. 2018) (citing Sandza v. Barclays Bank PLC, 151 F.Supp.3d 94, 108 (D.D.C. 2015)). This
heightened pleading standard requires the Plaintiff to allege the “time, place and content of the
false misrepresentations,” in addition to “the fact[s] misrepresented, and what was retained or
given up as a consequence of the fraud.” Id. The D.C. Circuit has cautioned that RICO claims
premised on fraud “must be particularly scrutinized because of the relative ease with which a
plaintiff may mold a RICO pattern from allegations that, upon closer scrutiny, do not support it.”
W. Assocs. Ltd. P'ship, ex rel. Ave. Assocs. Ltd. P'ship v. Mkt. Square Assocs., 235 F.3d 629, 637
(D C. Cir. 2001).
At the outset, for reasons discussed above, the alleged fraudulent misrepresentations
Defendants made to the Plaintiff cannot be the basis for Plaintiff’s RICO claim. See Section
IV(B)(4), supra. In opposition to Defendants’ motion, Plaintiff attempts to improperly repurpose
26
his civil RICO claim to include wire fraud and tax fraud as the predicate acts. See Pl.’s Opp. at
22-23. These newly alleged predicate acts cannot be the basis of Plaintiff’s RICO claim.11 Further,
the Plaintiff has failed to point to evidence in the record of these alleged predicate acts sufficient
to overcome a finding of summary judgment for the Defendants. See id. Therefore, Defendants’
Motion for Summary Judgment as to Count XXV is granted.
D. Dismissal Under 12(b)(6)
Defendants’ Motion for Summary Judgment concerning Plaintiff’s intentional infliction of
emotional distress (“IIED”) claim, breach of fiduciary duty claim, DC. Stat 29.804.10 claim, and
quantum meruit claim does not attack the factual basis which underpins the complaint, but rather
attacks the quality of the Plaintiff’s pleading. See Defs.’ Mem. at 30-31. Accordingly, while
Defendants bring their motion under Fed. R. Civ. P. 56, it is in actuality a de facto motion to
dismiss pursuant to Fed. R. Civ. P. 12(b)(6) as it pertains to these claims. See Davis v. Michigan
Dep’t of Corr., 746 F.Supp. 662, 664-65 (E.D. Mich. 1990) (“[W]hen a Rule 56 motion for
summary judgment can be granted without considering extraneous materials—such as affidavits—
the district court has the discretion to view such a motion as a Rule 12 motion to dismiss.”). Thus,
it is within the court’s discretion to convert a Rule 56 motion to a Rule 12(b)(6) motion when the
dispositive motion “can be granted without considering extraneous materials.” Id. at 665.
1. The Intentional Infliction of Emotional Distress Claim
11
Though Defendants have not fashioned their argument as a motion to dismiss for failure to state a claim, the Court
is within the bounds of Federal Rule of Civil Procedure 56(f) in dismissing Plaintiff’s RICO claim. Defendants
raised the argument that Plaintiffs pleadings are devoid of alleged predicate acts to support. See Defs.’ Mem. at 26.
Defendants cite to case law dismissing a civil RICO claim for failure to meet Rule 9(b)’s pleading standard. Id.Plaintiff’s responded, alleging for the first time, that wire fraud and tax fraud are predicate acts supporting their
RICO claim. See Pl.’s Opp’n. at 22-23. Finally, Defendants correctly pointed out that that Plaintiff’s fail to
establish the basic elements of wire fraud and tax fraud. See Defs.’ Reply at 13. Therefore, Plaintiff was on notice
that his complaint as it pertains to the predicate acts necessary for RICO may not have met the standard for Rule
9(b).
27
Plaintiff’s IIED claim against Defendants Dawson and Heiss arises from Defendants
Dawson’s and Heiss’ alleged sexual misconduct. See SAC at ¶¶ 357-60; ECF No. 148-12,
(Xereas Tr. at 256:10-257:2). Defendants contend Plaintiff failed to state a claim upon which
relief can be granted on three grounds: (1) the conduct he alleged does not rise to the requisite
level of “extreme and outrageous” conduct; (2) he does not allege emotional distress with any
specifics, and (3) nor does the Plaintiff allege any injuries proximately caused by Defendants’
conduct. Defs.’ Mem. at 30-31. Upon consideration, Plaintiff’s IIED claim must be dismissed
because he fails to allege facts which might satisfy any element of the tort or which would entitle
him to relief.
To state an IIED claim in the District of Columbia, a plaintiff must allege "(1) 'extreme
and outrageous' conduct on the part of the defendant which (2) intentionally or recklessly (3)
causes the plaintiff 'severe emotional distress.'" Sere v. Group Hosp., Inc., 443 A.2d 33, 37
(D.C. 1982) (citing Restatement (Second) of Torts § 46 (1965)), cert. denied, 459 U.S. 912(1982). To be "extreme and outrageous" in satisfaction of the first element under D.C. law, the
defendant's conduct must "go beyond all possible bounds of decency, and to be regarded as
atrocious, and utterly intolerable in a civilized community." Sere, 443 A.2d at 37 (citing
Restatement (Second) of Torts § 46 (1965)). While Plaintiff alleges in a conclusory manner that
Defendants’ actions were “atrocious and utterly intolerable in a civilized community,” he fails to
allege facts that support such a conclusion.12 SAC at ¶¶ 359.
12
To the extent that Plaintiff attempts to allege IIED in concert with breach of contract, this argument fails as a
matter of law. For an IIED claim to be actionable in connection with a breach of contract claim, the tort must exist in
its own right independent of the contract, and any duty upon which the tort is based must flow from considerations
other than the contractual relationship. See Choharis v. State Farm Fire & Cas. Co., 961 A.2d 1080, 1089 (D.C.
2008) (“The tort must stand as a tort even if the contractual relationship did not exist”).
28
In response to Defendant’s motion, Plaintiff claims that Defendant Heiss initiated or
otherwise engaged in sexually inappropriate conversation, used offensive or suggestive language
with employees, and invited individuals to see or feel her breasts. Pl.’s Opp’n. at 25-26. While
the court agrees that this alleged conduct can certainly be contrary to professional standards and
upsetting to persons like Plaintiff, it does not approach the high “extreme and outrageous”
standard required by D.C. law. See Culler v. Exal Corp., 193 F.Supp 3d 850, 853 (N.D. Ohio,
2016) (sexually-charged remarks and alleged sexual harassment, in addition to hours of false
imprisonment without food or water did not rise to the level of extreme or outrageous conduct
for the purposes of an IIED claim). Moreover, most relevant factual allegations made by
Plaintiff in the instant case do not directly involve Plaintiff, but rather other individuals. In fact,
the only factual allegations Plaintiff made which directly implicate him are “mere insults” and
obscenities which this court has found do not rise to the level of extreme and outrageous
conduct. Halcomb v. Woods, 610 F.Supp. 2d 77, 80 (D.C. 2009) (liability “clearly does not
extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities”)
(quoting Restatement (Second) of Torts § 46). Plaintiff’s cited authority, Hoskins v. Howard
Univ., 839 F. Supp. 2d 268, 278, 283 (D.D.C. 2012) is distinguishable. In Hoskins, the Court
reasoned that IIED claim turned on defendants’ “blatant and repeated instances of inappropriate
conduct,” not alleged in the present instance. 839 F. Supp. 2d at 283.
Moreover, the Plaintiff makes no factual allegations indicating that Defendants acted
"intentionally or recklessly" or that the plaintiff suffered "severe emotional distress" as a result
of the defendants' behavior. See Khan v. Parsons Global Servs., 521 F.3d 421, 428 (D.C. Cir.
2008) (emphasis added). Plaintiff alleges that he suffered various stress-related medical
conditions as a result of the Defendants’ actions. See Pl.’s Opp’n at 26. Even if this court were
29
to accept as true Plaintiff’s allegation of extreme and outrageous conduct on the part of
Defendants, Plaintiff lacks any evidence to support claims that he suffered emotional distress or
evidence that such distress occurred as a result of said conduct. However troubling Plaintiff may
have perceived the Defendants’ alleged conduct, “as a matter of law, it [is] not sufficiently
extreme and outrageous to state a claim of intentional infliction of emotional distress.” Carty v.
CVS Pharmacy, LLC, 264 F. Supp. 3d 190, 197 (D.D.C. 2017) (collecting cases). Defendants
demonstrated beyond doubt that Plaintiff can prove no set of facts in support of his claim which
would entitle him to relief. Therefore, Count XX is dismissed.
2. The Breach of Fiduciary Duty Claim
Plaintiff claims that Defendants Dawson and Heiss allegedly breached their fiduciary duty
of loyalty and care. 13 See SAC at ¶¶361-374. Defendants maintain that Plaintiffs failed to plead
any facts supporting a breach of fiduciary duty, insofar as the Plaintiff alleges the Defendant’s
acted in another’s interest in dealing with the LLC. See Defs.’ Mem. at 25-26. Furthermore,
Defendants contend that because Plaintiff’s initial investment is worth more now, the Plaintiff
suffered no injury. See Id.To state a claim for breach of fiduciary duty under D.C. law, the Plaintiff must allege facts
sufficient to establish: (1) defendant owed plaintiff a fiduciary duty; (2) a breach of that; and (3)
proximate cause and injury to be inferred from those facts. See Command Consulting Group, LLC
v. Neuraliq, Inc., 623 F.Supp.2d 49, 54 (D.D.C. 2009) (citing Shapiro, Lifschitz & Schram, P.C.
v. Hazard, 24 F.Supp.2d 66, 75 (D.D.C.1998)). The Plaintiff “must allege facts from which
proximate cause and injury may be inferred if they seek compensatory damages.” Id. Generally,
a contract does not create a fiduciary duty, unless the parties “extended their relationship beyond
13
Plaintiff also brings this claim as a derivative plaintiff.
30
the limits of the contractual obligations to a relationship founded upon trust and confidence.” Paul
v. Judicial Watch, Inc., 543 F. Supp. 2d 1, 6 (D.D.C. 2008). This requires “a ‘special confidential
relationship’ that transcends an ordinary business transaction and requires each party to act with
the interests of the other in mind.” Ying Qing Lu v. Lezell, 919 F. Supp. 2d 1, 6 (D.D.C. 2013);
(quoting High v. McLean Fin. Corp., 659 F.Supp. 1561, 1568 (D.D.C.1987)).
In his complaint, Plaintiff puts forth conclusory allegations that the Defendants “failed to
disclose all material facts concerning the business as well as all facts involving membership
interests of the LLC.” SAC at ¶ 367. In response to the present motion, Plaintiff argues that this
included Defendant Heiss being “brought in to Riot Act” so Defendant’s Dawson and Heiss could
control the decisions of the LLC. Pl.’s Opp’n. at 28. The court need not delve into the intricacies
of the Plaintiff’s relationship with Defendants Dawson and Heiss since it is clear that a special
confidential relationship transcending an ordinary business transaction did not take place.
Therefore, Count XXI is dismissed.
3. The Claim for Accounting and for Documents
Plaintiff brings claims for alleged deficiencies in the production of documents pursuant to
DC Stat. 29.804.10 and an action for accounting under D.C. common law.14 See SAC at ¶¶ 375-
81, 386-88. In support of his claim, Plaintiff argues that, after multiple requests and demands,
Defendants have failed to provide specific documents and an accounting of LLC funds.
“An accounting is a detailed statement of debits and credits between parties arising out of
a contract or a fiduciary relation.” Bates v. Nw. Human Servs., Inc., 466 F.Supp.2d 69, 103
(D.D.C.2006) (quotation marks omitted). “Such relief may be obtained at the close of litigation .
. . as long as the plaintiff is able to show that ‘the remedy at law is inadequate.’” Id. (citations
14
Plaintiff also brings this claim as a derivative plaintiff.
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omitted). An account therefore may “be appropriate when a plaintiff is unable ‘to determine how
much, if any, money is due to him from another.’” Id. (quoting Bradshaw v. Thompson, 454 F.2d
75, 79 (6th Cir.1972)). Importantly, “an accounting is ‘an extraordinary remedy’ that is only
appropriate, if at all, after liability has been determined.” Armenian Assembly of America, Inc. v.
Cafesjian, 692 F.Supp.2d 20, 48 (D.D.C.2010).
The Plaintiff's factual allegations in the complaint pertaining to the accounting relief, even
if accepted as true, do not “plausibly give rise to an entitlement to [the forms of] relief” he seeks.”
Wilson v. On the Rise Enterprises, LLC, 305 F. Supp. 3d 5, 20 (D.D.C. 2018) (quoting Iqbal, 556
U.S. at 679). First, an accounting relief only arises when “accounts between the parties are of such
a complicated nature that they can be satisfactorily unraveled only by a court of equity.”
Cauderlier & Assocs., Inc. v. Zambrana, 527 F. Supp. 2d 142, 154 (D.D.C. 2007) (quoting
Donovan v. U.S. Postal Service, 530 F.Supp. 894, 900–01 (D.D.C. 1981)). Plaintiff has not alleged
that his accounts with the LLC are so complicated in nature that an accounting is appropriate. Cf.
Donovan, 530 F.Supp. at 901 (“The rights of between 500,000 and 700,000 employees are at
stake.”). Second, the Plaintiff must show “that the remedy at law is inadequate.” Bates, 466
F.Supp.2d at 103 (internal citation omitted). The Plaintiff has not put forth any evidence to support
a finding that a genuine issue of material fact exists regarding the production of accounting
documents. See Pl.’s Opp’n. at 26-27. Therefore, Counts XXII and XXIV are dismissed.
IV. CONCLUSION
An order providing for the determinations set forth herein appears as Document No. 187
in the ECF records of the Court.
.
DEBORAH A. ROBINSON
United States Magistrate Judge
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