United States District Court, W.D. Texas, Austin Division
RUSSELL P. STOUT, JR., Plaintiff,
DALE GREMILLION, RYAN COLLINS, MICHIGAN MUTUAL, INC. and SAVANT VENTURE, INC., a/k/a SAVANT VENTURES, LLC, Defendants.
REPORT AND RECOMMENDATION OF THE UNITED STATES
HIGHTOWER UNITED STATES MAGISTRATE JUDGE.
HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE
the Court are Plaintiff's Motion to Dismiss
Defendants' Counterclaims (Dkt. No. 26), Defendants'
Response (Dkt. No. 30), and Plaintiff's Reply (Dkt. No.
34). The undersigned submits this Report and Recommendation
to the District Judge pursuant to 28 U.S.C. §
636(b)(1)(B), Federal Rule of Civil Procedure 72, and Rule
1(d) of Appendix C of the Local Rules.
undersigned first summarizes Stout's claims before
addressing Collins' and Savant Ventures'
counterclaims, which are the subject of the motion to
Third Amended Complaint (“TAC”),  Plaintiff Russell
P. Stout, Jr. (“Stout”) alleges that he formed a
joint enterprise “or in the alternative a
partnership” with Defendants Dale Gremillion
(“Gremillion”) and Ryan Collins
(“Collins”) when they formed a business called
Lone Star Financing (“Lone Star” or “the
Company”) approximately eight years ago. (TAC, Dkt. 11
¶ 6). Lone Star generated leads for potential customers
seeking mortgage financing and received commissions from
mortgage companies for referrals. (Id. ¶ 7).
Stout and Gremillion served as loan officers. (Id.
¶ 6). According to Stout, he and Gremillion worked with
Collins to create and develop the website
LoneStarFinancing.com for their company. (Id.).
“The website was developed and maintained by Collins
for the exclusive use of Gremillion and
Stout.” (Id.) Stout and Gremillion
“agreed to evenly split the leads and the income
generated from the website on a 50/50% basis and to work
together to close as many loans as possible.”
(Id. ¶ 8). They did so successfully for about
eight years. (Id.). Stout and Gremillion paid
Collins together from their revenue and earnings for
maintaining the LoneStarFinancing.com website. (Id.
¶¶ 7, 10). Lone Star served different mortgage
companies at different times. When Stout, Gremillion, and
Collins “moved to another mortgage company as part of
the Lone Star Financing partnership or joint enterprise,
” they brought their own team of support staff and
continued to operate as an independent partnership.
(Id. ¶ 10).
alleges that Gremillion began concealing bookkeeping and
excluding Stout from sharing commissions by diverting loans
to his wife, another loan officer. (Id. ¶¶
10-13). In 2018, both Stout and Gremillion left to work for
Michigan Mutual, Inc. (“Michigan Mutual”).
(Id. ¶ 15). Stout alleges that “[w]hen
they moved to Mutual Mortgage,  Gremillion and Stout took with
them the LoneStarFinancing.com website.”
(Id.). Gremillion and Collins “unilaterally
and without advance warning, approval or compensation, shut
off all of Stout's access to leads from that
website.” (Id.). “Gremillion began
transferring leads generated from the website and potential
customers to Michigan Mutual.” (Id.). Stout
alleges that Gremillion “took for himself 100% of all
the leads generated from that website and 100% of all
commissions [and] income . . . in direct contravention of the
agreement he had with Stout to split leads and commissions or
income on a 50/50% basis.” (Id.). Stout
alleges that Gremillion and Collins never compensated him.
(Id.). Stout alleges that Michigan Mutual is now
receiving leads, revenue, and earnings that rightly belong to
him. (Id. ¶ 17).
on these allegations, Stout asserts twelve causes of action.
Against all defendants, he asserts claims of conversion,
money had and received, unjust enrichment, violation of the
Theft Liability Act, quantum meruit, and intentional
infliction of emotional distress. (Id. ¶¶
25-26, 31-32, 36-37, 39). Against Collins and Gremillion,
Stout asserts claims of breach of contract, breach of
warranty, fraud, breach of fiduciary duty, and “one or
more torts” while acting within the scope of the
alleged joint enterprise. (Id. ¶¶ 27-28,
30, 33, 38, 40). Against Michigan Mutual, he asserts a
tortious interference claim. (Id. ¶ 29). Stout
also lists Savant Ventures, Inc., d/b/a/ Savant Ventures, LLC
(“Savant”) as a defendant does not assert any
claims against Savant. (Id. ¶¶ 5, 24).
Stout advises that he has added Savant as a defendant because
he “has been advised that [Savant] claims ownership
and/or copyright as to the website LoneStarFinancing.com,
” making Savant an indispensable party to this suit.
(Id. ¶ 24).
Collins and Savant Ventures' Counterclaims
and Savant Ventures (together,
“Counterclaimants”) filed counterclaims against
Stout on March 4, 2019, alleging a different set of facts.
(Dkt. No. 24). They allege that Collins incorporated Savant
as a limited liability company “at least as early as
April 18, 2007.” (Id. ¶ 10). Collins is
the sole owner and has sole control of Savant Ventures.
(Id. ¶ 11). Savant registered the domain name
“lonestarfinancing.com” (“the Domain
Name”) on April 18, 2007. (Id. ¶ 12). At
the same time, Savant created the Lone Star Financing word
trademark (“the Word Mark”) and design trademark
(“the Design Mark” or “Logo”).
(Id. ¶ 13). Since at least June 12, 2007,
Savant has continuously used the Word Mark and the Design
Mark in interstate commerce in association with “Lead
Generating Services.” (Id. ¶¶
14-16). Those services include generating leads to mortgage
companies for entities that needed loans, selling those leads
to mortgage companies, and creating content for the Lone Star
Financing website. (Id. ¶ 15).
and Gremillion met in 2011. (Id. ¶ 19).
Counterclaimants allege that in 2011, Savant and Gremillion
entered into a business arrangement with Gremillion's
then-employer, a mortgage company, through which Savant
licensed the Lone Star Financing Website to the mortgage
company, which would buy the leads from Savant.
(Id.). When Gremillion moved to work for another
mortgage company, they terminated that license and Savant
entered a new license agreement with the new employer.
(Id. ¶ 20). At some point in 2011, Stout became
employed with the same company. (Id. ¶ 21).
Counterclaimants allege that “by this time, ”
Savant had already created and used the Lone Star Financing
Word Mark and Design Mark for Lead Generating Services and
created significant content on the Website. (Id.).
Collins and Savant Ventures allege that there is no written
document assigning any interest in the Website, Word Mark, or
Design Mark to Stout himself or the alleged business
partnership or joint enterprise. (Id. ¶ 44).
allege that when Stout began working with Gremillion, both
were W-2 employees who received commissions from their
employer mortgage company. (Id. ¶ 22). They
further allege that the terms of any commissions were between
Stout and the mortgage company. (Id. ¶ 23).
Collins and Savant “did not” and “could
not” receive any portion of the commissions from Stout
and Gremillion. (Id. ¶ 24). Savant was paid by
the licensor mortgage company for use of the website and
associated marks. (Id. ¶ 25). Counterclaimants
state that, “[f]rom time-to-time [sic]” from 2011
to 2018, Stout and Gremillion would move to a new mortgage
company at the same time, employed as W-2 employees for each.
(Id. ¶ 25).
early 2018, Stout and Gremillion both worked for Open
Mortgage, which was “permitted to do
business” under the Lone Star Financing Word Mark.
(Id. ¶¶ 27-28). Counterclaimants allege
Stout was aware that Savant controlled the Lone Star
Financing Website (id. ¶ 33), that Savant owned
the copyright for the content on the Website (id.
¶ 34), that Savant owned the Word Mark and Design Mark
(id. ¶ 35), that Savant licensed the use of the
marks and the Website to certain mortgage company employers
(id. ¶ 36), and that in 2018, Open Mortgage was
using the marks through its agreement with Savant
(id. ¶ 35).
time in 2018, there was a change in employment between Stout
and Gremillion “such that they no longer would be
employed by the same employer.” (Id. ¶
37). From subsequent allegations, the undersigned construes
this to mean that at some time in 2018, Gremillion left Open
Mortgage to work for Michigan Mutual Inc., while Stout
remained at Open Mortgage. (See Id. ¶ 38).
Counterclaimants allege that Stout and Gremillion each
approached Collins and Savant Ventures to provide services to
their respective employers. (Id. ¶ 38). Collins
chose Michigan Mutual. (Id. ¶ 39). Collins and
Savant Ventures terminated their license with Open Mortgage
and entered into an arrangement granting Michigan Mutual
“rights in and to the use of” the Lone Star
Financing Website, the Lone Star Word Mark, and the Lone Star
Design Mark. (Id. ¶¶ 40-41).
2018, Stout “began asserting” rights to the Lone
Star website, Word Mark, and Design Mark, and that some form
of business relationship existed between himself, Collins,
and Gremillion. (Id. ¶ 42). At Stout's
request, Collins, Gremillion, and Open Mortgage attended
mediation to attempt to resolve the dispute. (Id.
¶ 48). After two rounds of mediation, the parties
settled all disputes with Open Mortgage. (Id. ¶
51). Stout filed this action in Travis County Court on July
27, 2018, and Gremillion timely removed to this court. (Orig.
Compl., Dkt. No. 1-2, at 3- 12; Not. Removal, Dkt. No. 1).
and Savant now counterclaim that Stout has tortiously
interfered with their actual and potential business
relationship with Michigan Mutual (id. ¶¶
99-115). They also seek declaratory judgment on five issues:
(1) a declaration that Stout did not author any of the
content appearing on the Lone Star Financing Website
(id. ¶¶ 62-68), (2) a declaration of
copyright ownership that Savant Ventures owns the copyrighted
materials appearing on the Lone Star Financing Website
(id. ¶¶ 69-75), (3) a declaration of
trademark ownership that Savant Ventures is the owner of the
Lone Star Financing Word Mark and Lone Star Financing Design
Mark (id. ¶¶ 76-84), (4) a declaration
that there is no partnership and/or joint enterprise
relationship among Stout, Gremillion, and Collins
(id. ¶¶ 85-91), and (5) a declaration that
all of Stout's claims set forth in the Third Amended
Complaint fail (id. ¶¶ 92-98). They also
seek attorneys' fees. (Id. ¶¶
116-120). Stout moves to dismiss all counterclaims for
failure to state a claim. (Mot., Dkt. No. 26).
Rule of Civil Procedure 12(b)(6) allows a party to move to
dismiss an action for failure to state a claim upon which
relief can be granted. In deciding a Rule 12(b)(6) motion to
dismiss for failure to state a claim, the court
“accepts all well-pleaded facts as true, viewing them
in the light most favorable to the [nonmovant].” In
re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th
Cir. 2007) (internal quotation marks omitted). The Supreme
Court has explained that a complaint must contain sufficient
factual matter “to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “A claim has
facial plausibility when the [nonmovant] pleads factual
content that allows the court to draw the reasonable
inference that the [movant] is liable for the misconduct
alleged.” Ashcroft, 556 U.S. at 678.
“While a complaint attacked by a Rule 12(b)(6) motion
to dismiss does not need detailed factual allegations, a
plaintiff's obligation to provide the grounds of his
entitle[ment] to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Twombly, 550
U.S. at 555 (internal quotations and citations omitted).
“Factual allegations must be enough to raise a right to
relief above the speculative level.” Id. The
court's review is limited to the complaint, any documents
attached to the complaint, and any documents attached to the
motion to dismiss that are central to the claim and
referenced by the complaint. Lone Star Fund V (U.S.),
L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir.
argues that the counterclaims for declaratory relief should
be dismissed because they duplicate Stout's existing
claims. He argues that the tortious interference claims
should be dismissed because the counterclaims contain no
factual allegations. Finally, Stout argues that
Counterclaimants are not entitled to attorneys' fees