Architettura Inc V Dsgn Associates Inc, et al

Brief/Memorandum in Support

N.D. Tex.March 30, 2017

1 UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION Architettura, Inc. ) Plaintiff ) v. ) ) DSGN Associates Inc.; Robert L. ) Meckfessel; Patricia Meckfessel; ) Brandon Bolin; McKinney ) Millennium LP; McKinney Millennium ) GP, LLC; GFD Holdings, LLC; ) McKinney Millennium II, LP, McKinney ) Case No.: Case No.:3:16-cv-03021-D Millennium II GP, LLC; Avondale ) Farms Seniors GP, LLC; Avondale ) Farms Seniors, LP; GD 2.0 Holdings, ) LLC; Benetta Lee Rusk; Rusk Real ) Estate, LLC; GroundFloor ) Development; Fort Worth Housing ) Authority; GD Opportunity I, LLC; ) Boston Capital Corporation; ) Ellen Rourke; and Texas Department ) Of Housing and Community Affairs, ) TF Development Limited Partnership ) Blue Line Lofts, LP ) Defendants ) MEMORANDUM IN SUPPORT OF PLAINTIFF'S REPONSE TO DEFENDANT TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS' MOTION TO DISMISS Comes now, Architettura, Inc., Plaintiff and files this its Memorandum in Support of Plaintiff's Response to Defendant Texas Department of Housing and Community Affairs' ("TDHCA") Motion to Dismiss and, in support, would show: Case 3:16-cv-03021-D Document 68 Filed 03/30/17 Page 1 of 8 PageID 829 2 Introduction Defendant TDHCA has filed a motion to dismiss Plaintiff, Architettura's claims against it, arguing, that (1) the claims against TDHCA are barred by sovereign immunity; and (2) Fed. R. Civ. Pro 12(b)(6) warrants dismissal, as Plaintiff has failed to state a claim against TDHCA. Since neither claim by TDHCA is valid, its Motion to Dismiss should be denied. I. The 5th Circuit has not affirmatively ruled out injunctive relief against TDHCA under these facts. TDHCA claims, since it is a State entity, it enjoys sovereign immunity on federal claims, including copyright infringement. TDHCA goes on to cite and brief several cases that have analyzed legislation directed at abrogating such agencies immunity granted by the Eleventh Amendment. However, this is not the full story. Specifically, the 5th Circuit has left open whether a suit for injunctive relief can still be brought against a state entity. See Chavez v. Arte Publico Pres, et al., 204 F.3d. 601 (5th Cir. 2000). In Chavez, the court remanded the case to the trial court level "with instructions to Dismiss insofar as these defendants are sued for money damages." (emphasis added). Case 3:16-cv-03021-D Document 68 Filed 03/30/17 Page 2 of 8 PageID 830 3 Architettura is not seeking money damages from TDHCA. The ruling in Chavez has seemingly left open the cause for an injunction against TDHCA to stop them from displaying infringing work. II. Plaintiff has pled more than sufficient facts supporting its claims against TDHCA to satisfy the requirements of Fed. R. Civ. Pro 8(a)(2), therefore no dismissal is warranted under Federal Rule 12(b)(6). Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain a "short, plain statement that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). If a Plaintiff fails to state a claim upon which relief may be granted, then dismissal would be warranted under Federal Rule 12(b)(6). See ZeniMax Media, Inc. v. Oculus VR, LLC., 166 F. Supp. 3d 697, 702-703. The Court's focus in a 12(b)(6) determination is not whether the plaintiff should prevail on the merits but, rather, whether the plaintiff has failed to state a claim. Id. citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563 (2007). Architettura, at this pre-discovery stage of the litigation, asserted all facts known at this time regarding TDHCA involvement: See Plaintiff's Second Amended Complaint, ¶ ¶ X, DD, Plaintiff states that Defendant Bolin and his entities submitted the brochure, containing Plaintiff's designs, and plan for the development to TDHCA. Upon information and belief, the underwriting department of TDHCA took one of Plaintiff's images from the brochure, and the Department created a design Case 3:16-cv-03021-D Document 68 Filed 03/30/17 Page 3 of 8 PageID 831 4 from that image and included it on its website (Exhibit s to Plaintiff's Second Amended Complaint) as part of a marketing brochure for a project Bolin was developing. The project, Avondale Seniors, is located in Fort Worth, Texas. See, Arista Records LLC v. Greubel, 453 F.Supp.2d 961, 966 (N.D. Tex. 2006). To establish a prima facie case of copyright infringement, a copyright owner must prove (1) ownership of a valid copyright, and (2) copying by the defendant of constituent elements of the work that are original. General Univeral Systems, Inc. v. Lee, et al., 379 F.3d 131 (5th Cir. 2004)(quoting17 U.S.C.A. § 101 et seq). This is exactly what Architettura pled with respect to the TDHCA. Architettura has provided a short and plain statement, which alleges the copyright ownership and more than one violation of its exclusive rights under the law. This is enough to satisfy Fed. R. Civ. Pro. 8(a) and defeat a Fed. R. 12(b)(6) Motion to Dismiss. See Greubel, at 966. Plaintiff does not have to provide detailed, factual scenarios at this stage - that is handled through liberal discovery rules and motions for summary judgment. See, Id. TDHCA complains that the claims alleged by Plaintiff are "wholly conclusory" and fail to adequately state a claim. However, TDHCA is Case 3:16-cv-03021-D Document 68 Filed 03/30/17 Page 4 of 8 PageID 832 5 requiring Plaintiff to state facts and allegations to a degree that shows success on the merits. This is not required. In the Greubel case, the allegation was that defendant “has used, and continues to use, an online media distribution system to download the Copyrighted Recordings, to distribute the Copyrighted Recordings to the public, and/or to make the Copyrighted Recordings available for distribution to others.” Id at 966. The court concluded that this allegation “adequately stated acts of copyright infringement by alleging that Greubel has violated Plaintiffs’ exclusive rights of reproduction and distribution.” Id. at 966. The Court's focus in a 12(b)(6) determination is not whether the plaintiff should prevail on the merits, but rather whether the plaintiff has failed to state a claim. See ZeniMax Media, Inc. v. Oculus VR, LLC, 166 F.Supp.3d 697, 703. In ZeniMax Media, the plaintiff claimed "defendant, through its acquisition, support, direction and financing, contributed to [other defendant's] infringing conduct . . . additionally, Plaintiffs claim that Defendant, as sole owner of [other defendant], had the right and ability to supervise infringing acts." Id. at 704. The court found these facts alleged by plaintiff were sufficient to survive a 12(b)(6) analysis. Architettura's allegations against TDHCA are very similar to those alleged to be sufficient in ZeniMax Media. Architettura claims the TDHCA Case 3:16-cv-03021-D Document 68 Filed 03/30/17 Page 5 of 8 PageID 833 6 participated in the dissemination of the Avondale Seniors marketing brochure (which contained infringed work) and were trying to buy the Avondale Seniors once the tax credit period ended. Thus, the claims stated by Plaintiff in this case are sufficient under Fed. R. Civ. P. 8(a) and should not be dismissed. II. Discovery could be done on this specific issue All factual disputes should be ruled in favor of Plaintiff at this stage of the litigation, requiring the denial of TDHCA's motion. See Diece-Lisa Industries, Inc, v. Disney Store USA, LLC et al., 2015 WL 5766902 (E.D. Tex. 2008)("when the legitimate factual disputes outlined in the briefing are construed in the light most favorable to the non-movant (here, Diece-Lisa), a prima facie case of personal jurisdiction exists."). Plaintiff has alleged facts, at this stage of the litigation, to defeat a Motion to Dismiss under 12(b)(6). TDHCA's motion is more suited to a motion for summary judgment, which can be brought after discovery has been taken and evidence has been garnered. See, generally, The Joseph Paul Corporation v. Trademark Custom Homes, Inc., 2016 WL 4944370 (N.D. Texas 2016). However, if it pleases the court, Plaintiff would be Case 3:16-cv-03021-D Document 68 Filed 03/30/17 Page 6 of 8 PageID 834 7 willing to conduct limited discovery into the issues raised by TDHCA to further brief this matter prior to a final ruling. III. In the alternative, Plaintiff can amend its pleadings Although the current complaint is a sufficient basis upon which Defendants can begin discovery, Plaintiff is not opposed to amending its complaint to add additional factual context. This is not a situation where Plaintiff beyond doubt can plead no set of fact in support of its claim. Accordingly, this Complaint may not be dismissed without an opportunity to replead. See, Randolph v. Dimension Firms, 630 F.Supp.2d 741, 744 (S.D. Tex. 2009). Case 3:16-cv-03021-D Document 68 Filed 03/30/17 Page 7 of 8 PageID 835 8 Prayer For the above reasons, Plaintiff requests that the court deny the motion to dismiss and grant Plaintiff all relief to which it has shown itself to be entitled. Respectfully submitted, /s/ Mark J. Zimmermann__________ Mark J. Zimmermann TX Bar No. 22276420 Amy Castle Gray TX Bar No. 00787219 Dealey Zimmermann Blend & Gray, P.C. 3300 Oak Lawn Ave., Suite 403 Dallas, Texas 75219 Phone 214.521.2987; Fax 214.521.2990 Email: mz@texlex.com ATTORNEYS FOR PLAINTIFF CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing document was filed electronically with the clerk of the court by using the CM/ECF system, which will send a notice of electronic filing to all counsel of record on 30 March, 2017, pursuant to the Federal Rules of Civil Procedure. /s/ Mark J. Zimmermann__________ Mark J. Zimmermann Case 3:16-cv-03021-D Document 68 Filed 03/30/17 Page 8 of 8 PageID 836 1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION Architettura, Inc. ) Plaintiff ) v. ) ) DSGN Associates Inc.; Robert L. ) Meckfessel; Patricia Meckfessel; ) Brandon Bolin; McKinney ) Millennium LP; McKinney Millennium ) GP, LLC; GFD Holdings, LLC; ) McKinney Millennium II, LP, McKinney ) Case No.: 3:16-cv-03021-D Millennium II GP, LLC; Avondale ) Farms Seniors GP, LLC; Avondale ) Farms Seniors, LP; GD 2.0 Holdings, ) LLC; Benetta Lee Rusk; Rusk Real ) Estate, LLC; GroundFloor ) Development; Fort Worth Housing ) Authority; GD Opportunity I, LLC; ) Boston Capital Corporation; ) Ellen Rourke; and Texas Department ) Of Housing and Community Affairs, ) TF Development Limited Partnership ) Blue Line Lofts, LP, ) Defendants ) ORDER Upon consideration of the briefs and arguments of counsel, it is ordered that Defendant Texas Department of Housing and Community Affairs’ Motion To Dismiss (Doc # 44) is DENIED. It is SO ORDERED. SIGNED: _______________________, 2017. _________________________________ JUDGE PRESIDING Case 3:16-cv-03021-D Document 68-1 Filed 03/30/17 Page 1 of 1 PageID 837