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Rivers and Hills Hospitality Group, LLC v. GTB Restaurant Texas, LLC

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

January 10, 2020

RIVERS AND HILLS HOSPITALITY GROUP, LLC, Plaintiff
v.
GTB RESTAURANT TEXAS, LLC, GARY WU, AN INDIVIDUAL, AND JESSICA WU, AN INDIVIDUAL, Defendants

          ORDER

          SUSAN HIGHTOWER UNITED STATES MAGISTRATE JUDGE

         Before this Court are three Motions to Dismiss filed by Defendants GTB Restaurant Texas, LLC, Gary Wu, and Jessica Wu (collectively, “GTB”). On June 6, 2019 GTB filed a Motion to Dismiss Plaintiff Rivers and Hills Hospitality Group LLC's (“R&H”) complaint pursuant to Fed.R.Civ.P. 12(b)(6) (Dkt. No. 7). On October 23, 2019, GTB as Counter-Defendants filed a Motion to Dismiss fraud and negligent misrepresentation counterclaims brought by Counter-Plaintiffs R&H, Andy & Cherise LLC, Bespoke Only LLC, and Erika Chou (collectively, “RHHG”) (Dkt. No. 24). On November 6, 2019, RHHG filed a response to GTB's Second Motion to Dismiss and First Amended Counterclaims (Dkt. Nos. 29, 30). Finally, on November 20, GTB filed a Motion to Dismiss the fraud and negligent misrepresentation counterclaims in RHHG's First Amended Counterclaims (Dkt. No. 31). The Court held an oral hearing on the motions on January 9, 2020.

         Because RHHG amended its counterclaims after GTB filed its Motion to Dismiss the counterclaims for fraud and negligent misrepresentation, GTB's October 23, 2019 Motion to Dismiss (Dkt. No. 24) is DISMISSED as moot.

         The Court proceeds to address GTB's Motion to Dismiss (Dkt. No. 7), its Motion to Dismiss the fraud and negligent misrepresentation counterclaims in RHHG's First Amended Counterclaims (Dkt. No. 31), and the related response and reply briefs.

         I. BACKGROUND

         R&H has offered fast-food restaurant services under the mark LOTUS CLEAVER since at least August 28, 2017. On December 22, 2017, R&H entered into an informal letter of intent with GTB, then operating a restaurant called General Tso'Boy at The Domain shopping center in Austin, Texas, to license its mark and convert its restaurant into a LOTUS CLEAVER location. The restaurant opened on April 18, 2018, in the former General Tso'Boy space. GTB did not sign any of the formal licensing agreements offered by R&H but continued to use the LOTUS CLEAVER mark. R&H sent GTB a cease-and-desist letter on February 15, 2019, and filed suit in this Court on May 14, 2019. In its Complaint, R&H alleges claims under the Lanham Act, 15 U.S.C. §§ 1117(a) and 1125, for trademark infringement, unfair competition, and false advertising. R&H seeks damages, attorneys' fees, and a permanent injunction against GTB's use of the LOTUS CLEAVER mark pursuant to 15 U.S.C. § 1116.

         GTB filed suit in state court a week after receiving the cease-and-desist letter, and RHHG removed GTB's suit to this Court on May 15, 2019. See GTB Restaurant Texas LLC, Gary Wu, and Jessica Wu v. River [sic] and Hills Hospitality Group LLC, Andy & Cherise LLC, Doron Wong, Erika Chou, and Andy Wang, Cause No. D-1-GN-19-970 (126th Dist. Ct. Travis County, Tex. February 22, 2019), which in this Court was given docket number 1:19-cv-523-RP. In its Amended Complaint, filed March 28, 2019 in state court, GTB asserts claims of fraud, breach of contract, negligence, breach of fiduciary duty, and a declaratory judgment that a partnership was formed among the parties. GTB seeks $200, 000 to $1 million in damages and attorney fees.

         On May 30, 2019, the Court granted the parties' Joint Motion to Consolidate (Dkt. No. 6).

         On October 2, 2019, RHHG filed its First Amended Answer to GTB's Amended Complaint, asserting common-law counterclaims of defamation, business disparagement, breach of contract, unjust enrichment, fraud, and negligent misrepresentation (Dkt. No. 20). As mentioned above, RHHG amended its counterclaims on November 6, 2019 (Dkt. No. 29).

         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 on 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.' 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 v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

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. Factual allegations must be enough to raise a right to relief above the speculative level.

Twombly, 550 U.S. at 555 (internal quotations and citations omitted). “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. ...


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