United States District Court, D. Maryland
CATHERINE C. BLAKE, District Judge.
TBC, Inc., an advertising firm, sues its former client, DEI Holdings, Inc., and several of its subsidiaries for failure to compensate TBC adequately for its work. In addition to DEI Holdings, TBC seeks damages from DEI Sales, Inc., Polk Audio, Inc., Polk Audio, LLC, Boom Movement, LLC, Definitive Technology, LLC, and Sound United, LLC. The latter four entities (together, the "LLC defendants") now move to dismiss TBC's complaint against them for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). And DEI Holdings, Inc., and DEI Sales, Inc. (together, the "DEI defendants"), seek to dismiss TBC's complaint against them under the same Rule. Those motions have been fully briefed and no hearing is necessary to their resolution. See Local Rule 105.5 (D. Md. 2014). For the reasons explained below, the LLC defendants' motion will be granted and the DEI defendants' motion will be denied in part and granted in part.
In its complaint, TBC describes itself as an advertising and public relations agency. ( See Compl. ¶ 16.) DEI Holdings is the "parent company of several brands in the consumer electronic [sic] industry including, among others, Polk Audio, Definitive Technology, and Boom." ( Id. at ¶ 2.) Sound United was the division of DEI Holdings that oversaw the operation of those brands. ( See id. ) Polk, Inc., and DEI Sales, Inc., both sold consumer audio equipment, including stereos, headphones, and radios. ( See id. at ¶ 20.)
In 2011, Polk, Inc., hired TBC to develop and implement a marketing plan for its new collection of headphones. ( See id. at ¶ 21.) For those services, Polk, Inc., agreed to pay TBC an estimated $12, 500 per month on the basis of 83 hours of work per month at a "blended" hourly rate of $150, with provision for additional payment for additional services. ( Id. at ¶ 23.) In 2012, DEI Sales hired TBC to promote Definitive Technology's Active Sound Bar. ( See id. at ¶ 27.) Much like the Polk contract, that agreement budgeted certain estimated monthly fees. ( See id. ) TBC also performed additional work that was not specifically described in either of those contract, for which "Polk, Inc. paid TBC additional project fees above and beyond the monthly retainer for all such work and services, " as specified in the contracts. ( Id. at ¶ 25.) And DEI Sales paid additional fees for services and work not specified in the Definitive Technologies contract. ( See id. at ¶ 27.)
Polk, Inc., subsequently retained TBC to complete advertising services for a marketing campaign for the Heritage Collection, a new line of personal audio equipment, on the terms outlined in the 2011 Polk contract. ( See id. at ¶¶ 43-45.) That work took substantially more time than the presumptive 83 hours per month described in that contract. Indeed, in 2013, TBC worked well over 3, 000 more hours than the 83 hours per month contemplated in the contract. ( See id. at ¶ 50.) Among other things, TBC created a campaign theme, designed promotional materials in traditional and digital media to promote the products, including a promotional video, researched competitors, and frequently reported its progress. ( See id. at ¶ 53.) TBC also performed work on behalf of the Polk Audio, Definitive Technology, Sound United, and Boom Movement brands. ( See id. at ¶ 54-57.)
For this work, TBC was "paid the monthly fees for 2013 based on the budgeted eighty-three (83) hours per month at the blended rate." ( Id. at ¶ 61.) TBC alleges that, "[b]ecause of the experience of their officers, directors and employees, [DEI Holdings, Polk, Inc., and DEI Sales] knew that the nature and volume of requested work and services could not be performed in only eighty-three (83) hours per month on a noncumulative basis and the time required to perform the requested work and services would far exceed such hours." ( Id. ; see also id. at ¶ 11.)
On June 19, 2013, TBC's Executive Vice President and Managing Director, Howe Burch, met with the chairman and CEO of DEI Holdings and DEI Sales, James E. Minarik, DEI Holding's Chief Marketing Officer, Blair Tripodi, and DEI Holding's Chief Design Officer, Michael DiTullo, in a Baltimore restaurant to discuss compensation for TBC's work in excess of the monthly budget. ( See id. at ¶ 64; see also id. at ¶¶ 33, 34, 38, 40.) Burch told Minarik and Tripodi "that TBC must be paid for its work and services." ( Id. at ¶ 64.) They "responded that TBC has done a fantastic job as their agency and that TBC would be paid in full for the hours worked." ( Id. ) Two days later, Burch sent Tripodi an email discussing these overages, including an attached "Manpower Report" demonstrating that TBC had worked 1, 636 hours over the budgeted monthly hours as of June 21, 2013. ( See id. at ¶ 65.) Tripodi never responded to that email. ( See id. )
After a meeting at Polk, Inc.'s Baltimore offices on August 16, 2013, TBC's Chairman and Chief Creative Officer, Allan Charles, spoke with Tripodi about these overages, explaining that TBC had performed over 2, 120 hours in excess of the budgeted estimates as of that date. ( See id. at ¶¶ 66-68.) Tripodi "promised that TBC would be paid in full for all hours worked, that Mr. Charles did not have to worry, and that [DEI Holdings, Polk, Inc., and DEI Sales] would make TBC whole." ( See id. at ¶ 70; see also id. at ¶ 11.)
In the months after that meeting, TBC continued to work for Polk, Inc., producing a promotional video that Tripodi indicated was essential to the Heritage Collection campaign, coordinating a launch event in New York City, and planning the purchase of media for late 2013 and early 2014. ( See id. at ¶¶ 70, 72, 74, 88.)
At a Baltimore restaurant on January 28, 2014, Tripodi told Burch that TBC would no longer perform advertising work on behalf of DEI Holdings, Polk, Inc., or DEI Sales. ( See id. at ¶ 95.) On February 7, 2014, TBC submitted an invoice for all work in excess of the budgeted 83 hours per month, indicating that TBC had performed 3, 261 hours of additional work. ( See id. at ¶¶ 97, 98.) TBC has never been paid for that work. ( See id. at ¶ 99.)
Polk LLC, Boom LLC, Definitive LLC, and Sound United LLC formed on February 25, 2014. ( See id. at ¶¶ 5-8, 105.) TBC alleges on information and belief that they are "successors to the unincorporated entities known as Polk Audio, Boom Movement, ... Definitive Technology and Sound United." ( Id. at ¶ 9.) The day after the formation of those entities, Polk, Inc., merged with DEI Sales, which emerged from the transaction as the surviving entity. ( See id. at ¶¶ 3-4.)
In September 2014, TBC filed a complaint in Maryland court, naming DEI Holdings, DEI Sales, Polk Audio, Inc., Polk Audio, LLC, Boom Movement, LLC, Definitive Technology, LLC, and Sound United, LLC. That complaint alleged counts of intentional misrepresentation, concealment, breach of fiduciary duty, negligent misrepresentation, constructive fraud, breach of contract, breach of the covenant of good faith and fair dealings, unjust enrichment, and conversion. The defendants ...