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Lyles v. Grant

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

August 3, 2018

Kenyatte Lyles, Plaintiff,
v.
Anthony Grant, Rotunda Hughey, Jennifer Doe, and Candice Makins, Defendants.[1]

          REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE

          Jacquelyn D. Austin United States Magistrate Judge.

         This matter is before the Court on a motion to dismiss filed by Defendants Anthony Grant (“Grant”) and Rotundra Hughey (“Hughey”) (collectively, “the Moving Defendants”). [Doc. 39.] Pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Local Civil Rule 73.02(B)(2), D.S.C., this Magistrate Judge is authorized to review all pretrial matters in this case and to submit findings and recommendations to the District Court.

         On August 21, 2017, Plaintiff, proceeding pro se, filed the instant action in the United States District Court in the Northern District of Georgia, alleging, among other things, racketeering activity in violation of the Racketeer Influenced and Corrupt Organization Act (“RICO Act”). [Doc. 1.] On December 1, 2017, the case was transferred to the United Sates District Court in the District of South Carolina by the Honorable Mark H. Cohen. [Doc. 9.] On March 14, 2018, the Moving Defendants filed a motion to dismiss Plaintiff's Complaint. [Doc. 39.] That same day, the Court issued an Order in accordance with Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), advising Plaintiff of the summary judgment/dismissal procedure and of the possible consequences if he failed to adequately respond to the motion. [Doc. 40.] Plaintiff filed a response in opposition on April 9, 2018 [Doc. 51], to which the Moving Defendants replied on April 16, 2018 [Doc. 56]. Accordingly, the motion is now ripe for review.

         BACKGROUND[2]

         Plaintiff alleges that the Moving Defendants violated his statutory and constitutional rights when they conspired to steal Azul Med Spa, LLC (“Azul Med Spa”), its assets, and its intellectual property from Plaintiff. [See Doc. 1.] Plaintiff alleges that he and Defendants agreed to form Azul Med Spa and registered the limited liability company (“LLC”) with the state of South Carolina in May 2017. [Id. at 7-9.] Plaintiff alleges that he-along with Defendants-own 100% of the membership interest in Azul Med Spa and that they each owned a one-third interest. [Id. at 7.] In forming the business, Plaintiff contends he invested money, intellectual property, knowledge, labor and organization skills, and branding and service marks while Grant and Hughey invested money. [Id.] Plaintiff asserts that he allowed Grant to purchase a 50% interest in his intellectual property prior to forming Azul Med Spa, but also that he assigned the service marks, trademarks, and copyrights to Azul Med Spa. [Id. at 7, 9.] Plaintiff also asserts that Grant verbally acknowledged that Plaintiff owned 100% of, presumably, Azul Med Spa's intellectual property in exchange for an additional contribution by Grant and Hughey into Azul Med Spa. [Id. at 9-10.] Plaintiff contends that Defendants forced him out of the business and are using his intellectual property. [Id. at 10.]

         Liberally construed-to the extent the Court understands Plaintiff's allegations-it appears Plaintiff contends that Defendants engaged in a series of fraudulent transactions and conveyances of Plaintiff's intellectual property, assets, and receivables. [See Doc. 1.] Plaintiff's Complaint, appears to allege the following claims: racketeering activity in violation of the RICO Act; conspiracy to violate the RICO Act; violation of the Lanham act-trademark infringement; conspiracy to commit fraud; breach of fiduciary duty; misappropriation of business opportunity; fraudulent conveyance; breach of the implied covenant of good faith and fair dealing; conversion; unjust enrichment; equitable accounting; and a derivative action asserting Azul Med Spa's claims against Grant. [See generally Doc. 1.] Plaintiff seeks to recover damages from Defendants for the improper use and infringement of his intellectual property. [Id. at 34-39.] Additionally, Plaintiff requests that the Court issue an order directing Defendants to destroy any products bearing his intellectual property and to transfer infringing domain names to Plaintiff's ownership. [Id.] Plaintiff also seeks to recover his costs and attorney's fees and for a trial by jury. [Id.]

         APPLICABLE LAW

         Liberal Construction of Pro Se Complaint

         Plaintiff brought this action pro se, which requires the Court to liberally construe his pleadings. Estelle v. Gamble, 429 U.S. 97, 106 (1976); Haines v. Kerner, 404 U.S. 519, 520 (1972); Loe v. Armistead, 582 F.2d 1291, 1295 (4th Cir. 1978); Gordon v. Leeke, 574 F.2d 1147, 1151 (4th Cir. 1978). Pro se pleadings are held to a less stringent standard than those drafted by attorneys. Haines, 404 U.S. at 520. The mandated liberal construction means only that, if the Court can reasonably read the pleadings to state a valid claim on which the plaintiff could prevail, it should do so. Barnett v. Hargett, 174 F.3d 1128, 1133 (10th Cir. 1999). A court may not construct the plaintiff's legal arguments for him. Small v. Endicott, 998 F.2d 411, 417-18 (7th Cir. 1993). Nor should a court “conjure up questions never squarely presented.” Beaudett v. City of Hampton, 775 F.2d 1274, 1278 (4th Cir. 1985).

         Motion to Dismiss Standard

         Rule 12(b)(2)

         Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a party may move the court to dismiss an action based on a lack of personal jurisdiction. “[W]hen . . . [a] court decides a pretrial personal jurisdiction dismissal motion without an evidentiary hearing, the plaintiff need prove only a prima facie case of personal jurisdiction.” Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993) (citing Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)). To satisfy this burden, the plaintiff must base its claim for personal jurisdiction “on specific facts set forth in the record.” Magic Toyota, Inc. v. Se. Toyota Distribs., Inc., 784 F.Supp. 306, 310 (D.S.C. 1992). Accordingly, “[t]he pleadings, affidavits, and other supporting documents presented to the court are construed in the light most favorable to [the] plaintiff, drawing all inferences and resolving all factual disputes in its favor.” Masselli & Lane, PC v. Miller & Schuh, PA, 215 F.3d 1320, 2000 WL 691100, at *1 (4th Cir. 2000) (unpublished table opinion) (citing Mylan Labs., 2 F.3d at 60); see also Mylan Labs., 2 F.3d at 62 (“In deciding whether the plaintiff has proved a prima facie case of personal jurisdiction, the district court must draw all reasonable inferences arising from the proof, and resolve all factual disputes, in the plaintiff's favor.” (citing Combs, 886 F.2d at 676; Wolf v. Richmond Cty. Hosp. Auth., 745 F.2d 904, 908 (4th Cir. 1984))). The court, however, need not “‘credit conclusory allegations or draw farfetched inferences.'” Masselli, 2000 WL 691100, at *1 (quoting Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir. 1994)).

         Rule 12(b)(4) and 12(b)(5)

         Under Rules 12(b)(4) and (5), a defendant can move to dismiss a complaint where service of process failed to comply with the requirements of Rule 4 of the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 12(b)(4), (5). Rule 4(e) governs the service of process upon individuals in the United States and provides that service may be accomplished by either (1) delivering a copy of the summons and complaint to the defendant personally or to a person of suitable age and discretion then residing at the defendant's home or usual place of abode or (2) delivering a copy of the summons and complaint to an agent authorized by appointment or by law to receive service of process. Fed.R.Civ.P. 4(e). Rule 4(e) also provides that service of process may be accomplished pursuant to the law of the state in which the district court sits. Id. Noncompliance with Rule 4 does not mandate dismissal where the necessary parties have received actual notice of a suit and where they have not been prejudiced by the technical defect in service. See Karlsson v. Rabinowitz, 318 F.2d 666, 668-69 (4th Cir.1963) (upholding service upon the defendant's wife at a home to which the defendant never intended to return).

         Rule 12(b)(6)

         Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a claim should be dismissed if it fails to state a claim upon which relief can be granted. When considering a motion to dismiss, the court should “accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff.” Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). However, the court “need not accept the legal conclusions drawn from the facts” nor “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Eastern Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). Further, for purposes of a Rule 12(b)(6) motion, a court may rely on only the complaint's allegations and those documents attached as exhibits or incorporated by reference. See Simons v. Montgomery Cty. Police Officers, 762 F.2d 30, 31 (4th Cir. 1985). If matters outside the pleadings are presented to and not excluded by the court, the motion is treated as one for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Fed.R.Civ.P. 12(d).

         With respect to well-pleaded allegations, the United States Supreme Court explained the interplay between Rule 8(a) and Rule 12(b)(6) in Bell Atlantic Corp. v. Twombly:

Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief, ” in order to “give the Defendants fair notice of what the . . . claim is and the grounds upon which it rests.” 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 on the assumption that all the allegations in the complaint are true (even if doubtful in fact).

550 U.S. 544, 555 (2007) (footnote and citations omitted); see also 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216, at 235-36 (3d ed. 2004) (“[T]he pleading must contain something more . . . than a bare averment that the pleader wants compensation and is entitled to it or a statement of facts that merely creates a ...


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