Architecttura Inc v. Mission Village of Pecos Llc et al

Brief/Memorandum in Support

N.D. Tex.December 20, 2016

1 UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION Architettura, Inc. Plaintiff, v. Mission Village of Pecos, LLC, Mission Village of Pecos MM, LLC, Louie Lange, III, Michael P. Ash and Texas Department of Housing and Community Affairs Defendant. Case No. 3:16-cv-02793-M MEMORANDUM IN SUPPORT OF DEFENDANTS MISSION VILLAGE OF PECOS, LLC, MISSION VILLAGE OF PECOS MM, LLC, LOUIE LANGE, III, and MICHAEL P. ASH’S MOTION TO DISMISS Defendants Mission Village of Pecos, LLC; Mission Village of Pecos MM, LLC, Louie Lange, III, and Michael P. Ash (the "Mission Village Defendants") file this Memorandum in Support of their Motion to Dismiss. I. INTRODUCTION. The Mission Village Defendants are two limited liability companies, and two individuals. The named limited liability companies were formed as project entities for the development of a low income housing facility to become known as Mission Village of Pecos, located in Pecos, Texas. (Affidavit of Louie Lange, III ("Lange Aff.") ¶¶ 2,4.) Michael P. Ash, named as an individual defendant, acted as Vice President of the parent company to the named limited liability companies. He is no longer associated with or employed by either of the named limited liability companies or their parent company. (Lange Aff. ¶ 5.) Louie Lange III, also named Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 1 of 13 PageID 56 2 individually, has been and is president of the parent company to the named limited liability companies. (Lange Aff. ¶ 2.) He currently has, nor has he ever had any formal role with either of the defendant limited liability companies. (Lange Aff. ¶ 3.) Plaintiff filed this lawsuit asserting a general claim for copyright infringement. Plaintiff's original complaint was filed on September 30, 2016. (Dkt. No. 1). The original complaint (Dkt. No. 1) was provided to The Mission Village Defendants via U.S. Mail, who each provided Plaintiff with a waiver of service of summons as to the original complaint. (Dkt. Nos. 7-10). The original complaint is the only document for which the Mission Village Defendants have either been served or have been asked to admit service (and in fact, have admitted service). Upon review of the docket in this matter, it appears that Plaintiff filed a first amended complaint on October 21, 2016. (Dkt. No. 6). The Mission Village Defendants have not been served a copy of the first amended complaint. The first amended complaint appears to have corrected the spelling of the Plaintiff's name. Plaintiff then, on December 12, 2016, filed a second amended complaint. (Dkt. No. 13). Counsel for the Mission Village Defendants received a copy of this pleading via U.S. Mail on December 19, 2016, without the referenced exhibits, and without waiver of service documents. Plaintiff's second amended complaint adds a request for injunctive relief: "Plaintiff also seeks attorneys (sic.) for it (sic.) quantum merit claims and injunctive relief." (Dkt. No. 13). Despite the three iterations of its complaint filed by Plaintiff (first correcting the spelling of Plaintiff's name, and then adding a request for injunctive relief) the substance of the complaint appears to remain unchanged. And, critically, the basis for any alleged infringement remains entirely unclear.1 Because a simple reading of Plaintiff's complaint does not reveal which 1 Because the Mission Village Defendants have only accepted service of the original complaint (Dkt. No. 1), this motion to dismiss is formally filed in response to Plaintiff's first complaint. However, because the Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 2 of 13 PageID 57 3 architectural plans were allegedly infringed, in what way those plans were infringed, when the alleged infringement may have occurred, by whom, and in what way the Mission Village Defendants were involved, it is facially deficient and must be dismissed. The Mission Village Defendants and the Court cannot be required to guess at Plaintiff's alleged claims, or the factual support for those claims. The complaint should be dismissed for failure to state a claim. And, the complaint against Louie Lange, III should be dismissed for lack of personal jurisdiction. II. PLAINTIFF FAILS TO STATE A CLAIM UNDER FED. R. CIV. P. 12(b)(6). Plaintiff's complaint states only vague, conclusory allegations, without the requisite factual support to state a basis for its claims. Rule 12(b)(6) allows the Mission Village Defendants to seek dismissal where Plaintiff has failed, in its Complaint, to state a claim upon which relief can be granted. Because the purpose of a Rule 12(b)(6) motion is to test the legal sufficiency of a plaintiff's complaint, the Court's inquiry is limited to whether the challenged pleadings themselves set forth allegations sufficient to make out the elements of a right to relief. Campbell v. Wells Fargo Bank, 781 F.2d 440, 442 (5th Cir. 1986). The district court may only consider the allegations in the complaint and any attachments. Travis v. Irby, 326 F.3d 644, 648 (5th Cir. 2003). In other words, it is not necessary or proper for a court to assume a plaintiff can prove facts that they have not actually alleged, or to assume that violations of law have occurred that have not been alleged. Id. (citing Associated Gen. Contractors of Cal,. Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983)). The complaint must be reviewed on its face to determine its sufficiency. substance of Plaintiff's complaint has not changed-the allegations are the same in each of the original complaint (Dkt. No. 1), the first amended complaint (Dkt. No. 6), and the second amended complaint (Dkt. No. 13)-this Motion to Dismiss is equally applicable to all three versions of Plaintiff's complaint and seeks dismissal of the case in its entirety. Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 3 of 13 PageID 58 4 When Plaintiff's complaint itself is reviewed as-is, without assuming facts or violations of law not set forth by Plaintiff therein, the compliant is facially deficient. It fails to allege specific facts that form the basis for its claims. As a result, the Mission Bay Defendants are left to guess as to the basis for Plaintiff's claims. Moreover, the elements of Plaintiff's claims are either missing altogether, or consist of solely unsupported, conclusory allegations. This is not enough. Plaintiff's complaint contains a general allegation of copyright infringement. What the complaint lacks, though, is any discussion of what specific copyright protected material was allegedly infringed, when such infringement occurred, by whom, and in what way. Plaintiff identifies Exhibit A and Exhibit B to its complaint as "two site plans" for which Plaintiff has "filed the proper applications and filed the proper fees required which have been delivered to the Copyright Office." (Plaintiff's 9/30/16 Complaint, Dkt. No. 1, "Comp." ¶9.) Plaintiff goes on to assert a conclusory allegation that the defendant limited liability companies and Mr. Ash "used Plaintiff's original copyrighted work in the application to the Texas Department of Housing and Community Affairs (TDHCA)," without an explanation of what the defendants did to "use Plaintiff's original copyrighted work," or what "original copyrighted work" was used. (Comp. ¶13.) To confuse matters even further, Plaintiff then alleges that the limited liability companies and Mr. Lange used "site plans and building plans … to obtain funding from the TDHCA. Some of these plans were not registered with the United States Copyright Office." (Comp. ¶15.) The last three paragraphs of Plaintiff's complaint make reference to "all Plaintiff drawings and plans," "copyrighted work," "copyrighted material," "intellectual property," and "other plans and drawings not yet registered." (Comp. ¶¶ 16-18.) The complaint is devoid of any dates, except to identify that Plaintiff was allegedly engaged by Mike Ash "[i]n January, 2013." (Comp. ¶10.) In short, it is not at all clear from Plaintiff's complaint: 1) what copyrighted work Plaintiff alleges Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 4 of 13 PageID 59 5 was infringed; 2) what actions taken by the Mission Village Defendants allegedly infringe; 3) when such infringement occurred; and 4) specifically who committed the alleged infringement. The Federal Rules of Civil Procedure demand more. Plaintiff has failed to state a claim upon which relief could be granted. Fed. R. Civ. P. 8(a)(2) requires "a short and plain statement of the claim showing that the pleader is entitled to relief." The statement must "give the defendant fair notice of what the … claim is and the grounds upon which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (emphasis added) (citation omitted). To withstand a motion to dismiss, the complaint must "contain sufficient factual matter accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A plaintiff must demonstrate grounds for relief beyond mere "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. A complaint "must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory. Id. at 562 (citation omitted) (emphasis omitted). At its core, Plaintiff's Complaint does not give the Mission Village Defendants the requisite fair notice of the grounds upon which its copyright infringement claim rests. In setting forth allegations sufficient to make out the elements of a right to relief, Architeturra must "plead specific facts rather than conclusory allegations." See Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000) (citation omitted); Elliott v. Foufas, 867 F.2d 877, 881 (5th Cir. 1989) ("[i]n order to avoid dismissal for failure to state a claim, a plaintiff must plead specific facts, not mere conclusory allegations …"). Architettura does not plead specific facts and instead makes conclusory allegations. For example: Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 5 of 13 PageID 60 6 "Defendants had the opportunity to copy Plaintiff's copyrighted material and did copy and use such material" (Comp. ¶14); " … Defendants have committed copyright infringement" (Comp. ¶17); "In using other plans and drawings not yet registered, Defendants have benefited from Plaintiff's work" (Comp. ¶18). The necessity, at the pleading stage, for "allegations plausibly suggesting (not merely consistent with)" the elements of plaintiff's claim "reflects Rule 8(a)(2)'s threshold requirement that the 'plain statement' possess enough heft to 'sho[w] that the pleader is entitled to relief.'" Twombly, 550 U.S. at 545. To succeed on a claim for direct copyright infringement, a plaintiff must prove two elements: (1) ownership of the copyrighted material and (2) copying by the defendant. Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772, 790 (5th Cir. 1999). However, a copy is only legally actionable if (1) the alleged infringer actually used the copyrighted material to create his own work, and (2) substantial similarity exists between the two works. Id. Besides the conclusory statements that Defendants "used the copyrighted work to develop the Mission Village of Pecos," and "had the opportunity to copy Plaintiff's copyrighted material and did copy and use such material," (Comp. ¶16) Plaintiff alleges no facts sufficient to identify the alleged actual use or copying, or any source of substantial similarity. Again, this is insufficient. III. PLAINTIFF'S CLAIM AGAINST LOUIE LANGE, III SHOULD BE DISMISSED FOR LACK OF PERSONAL JURISDICTION. Plaintiff alleges that Louie Lange, III "is the owner of the membership interests in the above LLCs," and that "he may be served at 54 E. First Street. (sic.) Fond du Lac, Wisconsin 54935." (Compl. ¶4). The only other allegation set forth in Plaintiff's complaint regarding Mr. Lange is arguably that "defendants used the copyrighted work to develop the Mission Village of Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 6 of 13 PageID 61 7 Pecos." (Comp. ¶16). How Mr. Lange allegedly "used the copyrighted work," and which set of materials Plaintiff is referring to as "the copyrighted work" is anyone's guess. Mr. Lange has not travelled to Texas in his personal capacity since 1996, and has spent only 13 days in Texas since 2011, all in his professional capacity. (Lange Aff. ¶¶ 6-8.) Likewise, Mr. Lange does not own or rent property, tangible or intangible, within the State of Texas. (Lange Aff. ¶ 9.) A federal court may exercise personal jurisdiction over a nonresident defendant only if (1) the long-arm statue of the forum state confers personal jurisdiction over that defendant, and (2) exercise of such jurisdiction by the forum state is consistent with due process under the United States Constitution. See Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999). Because Texas's long-arm statute has been interpreted to extend to the limits of due process, the Court must determine whether subjecting Mr. Lange to suit in Texas would be consistent with the Due Process Clause of the Fourteenth Amendment. Electrosource, Inc. v. Horizon Battery Techs. Ltd., 176 F.3d 867, 871 (5th Cir. 1999). The Due Process Clause of the Fourteenth Amendment permits the exercise of personal jurisdiction over a nonresident defendant only when two requirements are met: (1) the defendant has purposefully availed himself of the benefits and protections of the forum state by establishing "minimum contacts" with the forum state, and (2) the exercise of jurisdiction over that defendant does not offend "traditional notions of fair play and substantial justice." Latshaw, 167 F.3d at 211 (quoting Int'l Shoe Co. v. Wash. Office of Unemployment Compensation & Placement, 326 U.S. 310, 316 (1945)) (emphasis added). Mr. Lange himself has not established minimum contact with Texas, and, as set forth below, jurisdiction over Mr. Lange cannot be Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 7 of 13 PageID 62 8 predicated upon jurisdiction over the Mission Village limited liability companies. Therefore, any claims against Mr. Lange should be dismissed for lack of personal jurisdiction. A. Mr. Lange has not established "minimum contacts" with Texas necessary to establish either specific or general jurisdiction. When a nonresident defendant presents a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident. Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). With that principle in mind, the "minimum contacts" aspect of this jurisdictional analysis can be established through "contacts that give rise to 'specific' personal jurisdiction or those that give rise to 'general' personal jurisdiction." Wilson v. Belin, 20 F.3d 644, 647 (5th Cir. 1994). General jurisdiction exists when a defendant's contacts with the forum state are unrelated to the cause of action but are "continuous and systematic." Id. (citing Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 (1984)). The Fifth Circuit has reiterated that the "continuous and systematic contacts test is a difficult one to meet, requiring extensive contacts between a defendant and a forum." Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 610 (5th Cir. 2008) (internal citations omitted). While Plaintiff, in its Complaint, does nothing to suggest otherwise, Mr. Lange's periodic business travel to Texas does not constitute "extensive contacts" and cannot equate to "continuous and systematic" contacts with Texas. (Lange Aff. ¶ 8.) Mr. Lange has not had extensive contacts with Texas. He has spent only approximately 13 days in Texas over 6 years, and each of these trips was taken in his professional capacity.2 This is not enough to meet the difficult task of establishing general jurisdiction. 2 Further, it is worth noting that "vague and overgeneralized assertions that give no indication as to the extent, duration, or frequency of contacts are insufficient to support general jurisdiction." Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 610 (5th Cir. 2008) (citing Gardemal v. Westin Hotel Co., 186 F.3d 588, 596 (5th Cir. 1999). Plaintiff makes no assertions regarding Mr. Lange's contacts with Texas. Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 8 of 13 PageID 63 9 Specific jurisdiction, on the other hand, exists when a nonresident defendant's contacts with the forum state arise from, or are directly related to, the cause of action. Id. The "minimum contacts" prong for specific jurisdiction is not met unless the non-resident defendant "purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its law." Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 419 (5th Cir. 1993) (citation omitted). The non-resident's "purposeful availment" must be such that the defendant "should reasonably anticipate being haled into court" in the forum state. Id., see also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Mr. Lange's minimal contacts with Texas related to the Mission Village development have not been such that he would reasonably anticipate being "haled into court" in Texas. (Lange Aff. ¶¶ 6-9.) In fact, Mr. Lange's contacts with Texas related to the Mission Village development have been sporadic short visits spread out over 6 years. (Lange Aff. ¶¶ 6-9.) Mr. Lange's contacts with Texas have all been related to the Mission Village limited liability companies and in his capacity as president of the limited liability companies' parent corporation. Limited contacts are insufficient to support an exercise of specific jurisdiction. "On several occasions this Court has observed that merely contracting with a resident of the forum state is insufficient to subject the nonresident to the forum's jurisdiction." Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773, 778 (5th Cir. 1986) (citations omitted). Mr. Lange's travel to Texas has been insufficient to establish specific personal jurisdiction. B. Jurisdiction over Mr. Lange cannot be predicated upon jurisdiction over the Mission Village limited liability companies. All of Mr. Lange's contacts with Texas have been on behalf of or in his role as president of the parent corporation to the Mission Village limited liability companies. Jurisdiction over an individual cannot be predicated upon jurisdiction over a corporation. Corporate boundaries are Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 9 of 13 PageID 64 10 generally respected by the courts. "If a corporate officer's only contact with the forum is through performance of his official duties, he is not, as a consequence therefrom, subject to personal jurisdiction in that forum." Bamford v. Hobbs, 569 F. Supp. 160, 168-69 (S.D. Tex. 1983) (citing Lakota Girl Scout Council, Inc. v. Havey Fund-Raising Mgmt., Inc., 519 F.2d 634, 637 (8th Cir. 1975)). In Bamford, the United States District Court for the Southern District of Texas explained: An individual may have his corporation's contacts with the forum attributed to him only if there is an alter ego relationship between the two that justifies a court in disregarding the separate corporate entity. See Lakota Girl Scout Council, Inc., 519 F.2d at 638. In this case, plaintiffs must show that Mr. Hobbs acted as an individual rather than as a corporate officer, or that Mr. Hobbs and either Hobbs-Bannerman Corporation or Hobbs- Hood, Joint Venture are, in reality, alter egos, before this court may assert jurisdiction over him. At this point plaintiffs have not sustained this burden. The fact that Mr. Hobbs personally negotiated the terms of the contract that is in dispute here, or that Mr. Hobbs has travelled to Texas to participate in transactions of the local office are not, in and of themselves, dispositive of the jurisdictional issue. Id. The United States District Court for the Northern District of Texas has also considered this issue: With limited exceptions, the fiduciary shield doctrine prohibits a court from exercising personal jurisdiction over an individual based solely on jurisdiction over the company with which the individual is associated. Fairchild v. Barot, 946 F. Supp. 2d 573, 578 (N. D. Tex. 2013) (citing Stuart v. Spademan, 772 F.2d 1185, 1197 (5th Cir. 1985)). Likewise, here, Plaintiff does not allege any set of circumstances that would allow this Court to exercise proper personal jurisdiction over Mr. Lange, as an individual. Jurisdiction over Mr. Lange cannot be predicated upon jurisdiction over the Mission Village limited liability corporations. Plaintiff's complaint does not allege facts necessary to establish specific or general jurisdiction over Mr. Lange such that he could reasonably expect to be haled into Texas court. In Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 10 of 13 PageID 65 11 fact, these facts do not exist. Mr. Lange's limited contact with Texas in his role as President of the parent company to the named limited liability corporations is not enough to establish jurisdiction. IV. CONCLUSION Jurisdiction as to Louie Lange, III is improper as this Court lacks personal jurisdiction over Mr. Lange, an individual. Further, Plaintiff's complaint fails to allege any facts sufficient to either identify the alleged copyright infringement or to show that Plaintiff is plausibly entitled to relief on its claim. Therefore, the Mission Village Defendants respectfully request that the Court dismiss Plaintiff's complaint for failure to state a claim upon which relief can be granted. Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 11 of 13 PageID 66 12 Dated this 20th day of December, 2016. /s/ John R. Nelson John R. Nelson TX Bar No. 00797144 Locke Lord LLP 600 Congress Ave., Suite 2200 Austin, TX 78701 Phone: (512) 305-4868 Fax: (512)-305-4800 jnelson@lockelord.com Joseph A. Unis, Jr. Texas Bar No. 24075625 Locke Lord LLP 2200 Ross Avenue, Suite 2200 Dallas, Texas 75201 Phone: (214) 740-8000 Fax: (214) 740-8800 and Jessica H. Polakowski Reinhart Boerner Van Deuren, S.C. 22 East Mifflin St., Suite 600 Madison, WI 53703 Phone: (608) 229-2200 Fax: (608) 229-2100 jpolakowski@reinhartlaw.com *Pro Hac Vice Application Forthcoming Attorney for Defendants Mission Village of Pecos, LLC, Mission Village of Pecos MM, LLC, Louie Lange, III, and Michael P. Ash Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 12 of 13 PageID 67 13 CERTIFICATE OF SERVICE I hereby certify that on December 20, 2016 a true and correct copy of the foregoing Memorandum in Support of Motion to Dismiss and supporting Affidavit of Louie Lange, III was served on all parties or their counsel of record through the CM/ECF system if they are registered users or, if they are not, by serving a true and correct copy via U.S. Mail. /s/ John R. Nelson John R. Nelson 35298045 Case 3:16-cv-02793-M Document 15 Filed 12/20/16 Page 13 of 13 PageID 68 Case 3:16-cv-02793-M Document 15-1 Filed 12/20/16 Page 1 of 2 PageID 69 Case 3:16-cv-02793-M Document 15-1 Filed 12/20/16 Page 2 of 2 PageID 70