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Rational Spirits LLC v. Rattleback, LLC

United States District Court, D. South Carolina, Charleston Division

March 23, 2017

Rational Spirits, LLC, Plaintiff,
v.
Rattleback, LLC, Wynn Sanders, and Theron Regnier Wannberg a/k/a Theron Regnier, Defendants.

          ORDER

          PATRICK MICHAEL DUFFY United States District Judge.

         This matter is before the Court on Defendants' joint motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (ECF No. 7), Defendant Wynn Sanders' motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(5) (ECF No. 20), and Plaintiff Rational Spirits, LLC's motion for default judgment against Sanders pursuant to Federal Rule of Civil Procedure 1 (ECF No. 21). For the following reasons, the Court grants the Rule 12(b)(6) motion in part and denies it in part. The Court denies the latter two motions.

         BACKGROUND

         This case is about a whiskey business gone awry. Rattleback is a spirits company whose members are Defendants Wynn Sanders and Theron Wannberg. In April 2016, Rattleback contracted with distiller Rational Spirits for the production and distribution of a liquor called Rattleback Rye. Around that same time, Rational Spirits and Rattleback each signed separate agreements with Lost Spirits Distillery, LLC regarding the sales and marketing of their products.

         Production of Rattleback Rye did not go well. The ingredients used to make the liquor turned out to be contaminated, making the product unsellable. Payment disputes between Rational Spirits and Rattleback ensued; by September, production of the liquor ceased and the parties were at an impasse. Rational Spirits repeatedly sought payment under the contract, but Sanders asserted that Rattleback had no money.

         Around that same time, Lost Spirits terminated its relationship with Rational Spirits and relocated to California. Rational Spirits believes that Rattleback encouraged Lost Spirits to cut ties with Rational Spirits and that the two companies have formed a partnership for the purpose of competing with Rational Spirits.

         PROCEDURAL HISTORY

         Rational Spirits filed suit against Rattleback, Sanders, and Wannberg in October 2016. It alleged claims against all three of them for breach of contract, misrepresentation, and constructive fraud. Rational Spirits also asserted a civil conspiracy claim against Sanders and Wannberg.

         In November 2016, the three defendants filed a joint motion to dismiss under Rules 12(b)(5) and (6). They argued that Rational Spirits had not properly served them and that, in any event, it had not adequately pled most of its causes of action. After Rational Spirits filed a response, Rattleback and Wannberg conceded they were properly served, leaving Sanders as the sole defendant challenging service. The Court denied the Rule 12(b)(5) portion of the motion without prejudice; because the time for Rational Spirits to serve Sanders had not yet expired, the motion was premature. The Court did not address the Rule 12(b)(6) arguments at that time.

         After the service deadline expired in January 2017, Sanders filed a renewed motion to dismiss under Rule 12(b)(5). Rational Spirits filed a response to that motion, as well as its own motion to sanction Sanders with default judgment. Sanders then filed a response opposing Rational Spirits' motion, as well as a reply in support of his own renewed motion.

         With the motions thoroughly briefed, they are now ripe for consideration.

         ANALYSIS

         I. Sufficiency of Service upon Sanders

         Rational Spirits hired a process server to serve Sanders and the other defendants. The server took a copy of the summons and complaint to a UPS store in Marina del Rey, California, where Rattleback and Sanders each rent separate mailboxes. After confirming with a store employee that Sanders had a mailbox there, the server handed the employee Sanders' copy of the summons and complaint.

         A plaintiff can serve an individual defendant by delivering a copy of the summons and complaint “to an agent authorized by appointment . . . to receive service of process.” Fed.R.Civ.P. 4(e)(2)(C). When Sanders began renting the mailbox at the UPS store, he agreed in writing as follows: “I irrevocably authorize [the UPS store] to act as my agent for service of process to receive any legal documents that may be served upon me. This authorization shall continue . . . until two years after my mail receiving service has been terminated.” (Pl.'s Mot. Default J., Ex. 3, Sanders Acknowledgement, ECF No. 21-4, at 1.) Nothing in the record suggests that this authorization was ...


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