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Stout v. Gremillion

United States District Court, W.D. Texas, Austin Division

September 9, 2019

RUSSELL P. STOUT, JR., Plaintiff,
v.
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 MAGISTRATE JUDGE

          SUSAN HIGHTOWER UNITED STATES MAGISTRATE JUDGE.

         TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

         Before 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.

         I. BACKGROUND

         The undersigned first summarizes Stout's claims before addressing Collins' and Savant Ventures' counterclaims, which are the subject of the motion to dismiss.

         A. Stout's Claims

         In his Third Amended Complaint (“TAC”), [1] 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.”[2] (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).

         Stout 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, [3] 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).

         Based 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).

         B. Collins and Savant Ventures' Counterclaims

         Collins 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).

         Collins 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).

         Counterclaimants 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).

         In early 2018, Stout and Gremillion both worked for Open Mortgage, which was “permitted to do business”[4] 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).

         At some 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).

         In June 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).

         Collins 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).

         II. LEGAL STANDARD

         Federal 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. 2010).

         III. DISCUSSION

         Stout 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 ...


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