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Manheimer v. Trufusion Yoga, LLC

United States District Court, D. Nevada

March 28, 2017

SETH MANHEIMER, Plaintiffs,
v.
TRUFUSION YOGA, LLC, et al., Defendants. AND RELATED COUNTERCLAIM

          ORDER

         Presently before the court is a joint motion to dismiss filed by defendants TruFusion Yoga, LLC (“TFY”), Michael Borden (“Borden”), Martin Hinton (“Hinton”), TruFusion LLC (“TF”), and TruFusion Franchising LLC (“TFF”) (collectively, as “defendants”). (ECF No. 38). Plaintiff Seth Manheimer (“plaintiff” or “Manheimer”) filed a response (ECF No. 44), to which defendants replied (ECF No. 45).

         Also before the court is Plaintiff's motion to dismiss. (ECF No. 55). TFY, TF, and TFF (collectively, as “counterclaimants”) filed a response (ECF No. 56), [1] to which plaintiff replied (ECF No. 57). . . . . . .

         I. Facts

         TruFusion Yoga (“TFY”) provides fitness classes in the Las Vegas area. TFY owns federal trademarks related to the TruFusion brand. (ECF No. 24 at 13). Steven Gregory (“Gregory”), Judiah Hoffman (“Hoffman”), and Jeff Starr (“Starr”) formed TFY on March 20, 2013. (ECF No. 24 at 6). Gregory dealt with organizational needs; Hoffman dealt with operational needs; Starr was the primary financier. (ECF No. 24 at 6).

         In June 2013, Borden purchased Starr's membership interest in TFY and plaintiff purchased a 1% interest in TFY. In July 2013, Borden, Hoffman, Gregory, Hinton and plaintiff entered into an operating agreement, which gave managers the authority to act on behalf of TFY. (ECF No. 24 at 7).

         Plaintiff alleges that during March through May of 2014, TFY bought Gregory's and Hoffman's interests in TFY. (ECF No. 24 at 9). Thereafter, plaintiff and Borden discussed restructuring the ownership and management of TFY and recapturing Gregory's and Hoffman's ownership interests. (ECF No. 24 at 8). According to plaintiff, he and Borden orally agreed that they, as partners, would have equal interests in TFY. (ECF No. 24 at 9-10). Plaintiff drafted a revised operating agreement memorializing these orally agreed upon terms. (ECF No. 24 at 9). The revised operating agreement, however, was never signed and executed. (ECF No. 24 at 12).

         On March 12, 2015, Borden registered TF, listing himself as its sole officer, and TFF, listing TF as its sole officer. (ECF No. 24 at 12-13). Plaintiff alleges that Borden created TF and TFF to divert TFY's business opportunities thereto by entering into sham agreements, wherein TF and TFF licensed TFY's trademark rights to licensees in exchange for an initial payment and royalties. (ECF No. 24 at 13-15).

         On September 16, 2016, plaintiff filed the original complaint (ECF No. 1), which he later amended on October 28, 2016 (ECF No. 24). In the amended complaint, plaintiff alleges, individually and on behalf of TFY, seventeen causes of action: (1) & (2) breach of loyalty against Borden and Hinton; (3) constructive fraud against Borden and Hinton; (4) breach of operating agreement against Borden, Hinton, and TFY; (5) breach of oral agreement against Borden, Hinton, and TFY; (6) declaratory judgment against Borden and Hinton; (7) & (8) accounting and unjust enrichment against TF, and TFF; (9) money owed; (10) intentional interference with prospective economic advantage against Borden, Hinton, TFF, and TF; (11) common law conspiracy against Borden and Hinton; (12) trademark infringement under 15 U.S.C. § 1114 against TFF; (13) trademark counterfeiting under 15 U.S.C. § 1116 against TFF; (14) false designation of origin and unfair competition under 15 U.S.C. § 1125(a) against TFF; (15) fraud against Borden; (16) dissolution of TruFusion LLC; and (17) rescission against TF and TFF. (ECF No. 24).

         In defendants' joint motion, defendants move to dismiss claims (2), (3), (8), (10), (12), (13), (14), (16), and (17) of Plaintiff's amended complaint (ECF No. 24). (ECF No. 38).

         On October 27, 2016, counterclaimants TFY, TF, and TFF filed a counterclaim and “third-party complaint”[2] (ECF No. 19), which they later amended (ECF No. 54-1) on January 3, 2017. In the amended counterclaim, counterclaimants allege four causes of action against plaintiff: (1) abuse of process; (2) intentional interference with prospective economic relations; (3) conversion; and (4) breach of fiduciary duty. (ECF No. 54-1).[3]

         In Plaintiff's motion, he moves to dismiss claims (1), (2), and (4) of the amended counterclaim (ECF No. 54-1). (ECF No. 55).

         The court will address each as it sees fit.

         II. Legal Standard

         A court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide “[a] short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).

         “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (citation omitted).

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 678-79. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678.

         Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the Plaintiff's complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678.

         Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has “alleged-but not shown-that the pleader is entitled to relief.” Id. (internal quotation marks omitted). When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.

         The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Starr court stated, in relevant part:

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.

Id. . . . . . .

         III.Discussion

         A. Defendants' Motion to ...


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