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The Harry and Jeanette Weinberg Foundation, Inc. v. St. Marks Avenue, LLC

United States District Court, D. Maryland

April 21, 2017

The Harry and Jeanette Weinberg Foundation, Inc.
v.
St. Marks Avenue, LLC, et al.

          ORDER

          George L. Russell, III United States District Judge

         Dear Parties:

         There are numerous motions to dismiss pending currently before the Court. First, there are Defendant Stacy Smith's two Motions to Dismiss for Failure to State a Claim (ECF Nos. 69, 102). Next, there are Plaintiff's, The Harry and Jeanette Weinberg Foundation, Inc. (the “Foundation”), and Defendants', St. Marks Avenue, LLC (“St. Marks”) and William Spivey (collectively, the “St. Marks Defendants”), Motions to Dismiss Smith's Counterclaim/Crossclaim[1] (ECF Nos. 79, 88). Finally, there are the Foundation's and the St. Marks Defendants' Motions to Dismiss Smith's Amended Counterclaim/Crossclaim[2] (ECF Nos. 120, 121). All the Motions are ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2016). For the reasons outlined below, the Court will: (1) deny Smith's Motions; (2) deny as moot the Foundation's and the St. Marks Defendants' Motions to Dismiss Smith's Counterclaim; and (3) grant the Foundation's and the St. Marks Defendants' Motions to Dismiss Smith's Amended Counterclaim. The Court will provide Smith an opportunity to move for leave to file a second amended counterclaim.

         The Foundation is a private Maryland organization that provides grants to organizations that offer direct services to disadvantaged and vulnerable individuals. (Am. Compl. ¶ 3, ECF No. 57). Smith is the Chief Executive Officer and registered agent of Communities Organized to Improve Life, Inc. (“COIL”), a not-for-profit corporation organized under Maryland law. (Id. ¶¶ 6, 7). This matter involves the sale of property located at 1200 West Baltimore Street, Baltimore, Maryland 21223 (the “Property”), COIL's principal address. (Id. ¶¶ 6, 18-21). On February 7, 1996, the Foundation entered into an agreement with COIL to develop the Property and granted COIL $675, 000 for its development (the “Agreement”). (Id. ¶¶ 13, 14). The Agreement also gave COIL the right to display “The Harry & Jeanette Weinberg” (the “Sign”) on the Property after construction ended. (Id. ¶ 16). The Agreement further stated that if COIL dissolved or sold the Property with the Foundation's consent, COIL must give the Property and all funds not yet spent on its development to a not-for-profit entity with a similar purpose or place the funds in a trust. (Id. ¶ 17).[3]

         On April 3, 2013, COIL sold the Property to St. Marks, a New York company, for $1, 000, 000 without the Foundation's consent. (Id. ¶¶ 4, 18-21). On November 13, 2014, the Foundation sent a letter to Smith and Defendant Spivey, the sole member of St. Marks, stating that it was ceasing any further engagement with COIL and requesting for the Sign to be removed from the exterior of the Property. (Id. ¶¶ 21, 22). Instead, the Sign remains displayed on the Property. (Id. ¶ 26). As of November 2015, COIL's forfeited its corporate charter, making Smith one trustee of COIL's assets. (Id. ¶ 6).

         On November 19, 2015, the Foundation sued the St. Marks Defendants and Smith, alleging claims for False Endorsement under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (2012) (Count I), Breach of Contract (Count II), Civil Conspiracy (Count III), and Accounting as to both COIL and Smith (Count IV). (Compl., ECF No. 1). On June 28, 2016, the Foundation filed a Motion for Leave to File an Amended Complaint. (ECF No. 38). Smith did not oppose the Motion. On December 5, 2016, the Court granted the Foundation's Motion (ECF No. 56) and the Foundation filed an Amended Complaint on the same day (ECF No. 57). On January 17, 2017, Smith filed a Motion to Strike and Renewed Motion to Dismiss for Failure to State a Claim (ECF No. 69) and the Foundation filed a Response on January 30, 2017 (ECF No. 70). Smith did not file a Reply.

         On February 3, 2017, Smith, on her own and without her counsel, filed a Counterclaim against the Foundation and the St. Marks Defendants alleging various claims under the U.S. Constitution (Count I), the Sherman Anti-Trust Act (Count II), and Maryland law (Counts III-XII). (Countercl., ECF No. 73). On February 15, 2017, Smith's counsel filed a Motion to Withdraw as Attorney (ECF No. 81) that the Court granted on February 16, 2017 (ECF No. 84). Proceeding pro se, Smith filed an additional Motion to Dismiss on March 13, 2017. (ECF No. 102).

         In response to Smith's Counterclaim, on February 14, 2017, the Foundation filed a Motion to Dismiss Smith's Counterclaim (ECF Nos. 79, 80) and on February 22, 2017, the St. Marks Defendants did the same (ECF No. 88). Smith responded to both Motions on March 13, 2017. (ECF Nos. 104, 105). The same day, Smith filed an Amended Counterclaim against the Foundation and the St. Marks Defendants alleging only Tortious Interference with Contract (Count I), Defamation of Character (Count II), Negligent and Intentional Infliction of Emotional Distress (Count III), and Abuse of Process (Count IV). (Am. Countercl., ECF No. 103). In response, on March 27, 2017, the Foundation and the St. Marks Defendants each filed a Motion to Dismiss Smith's Amended Counterclaim. (ECF Nos. 120, 121). Smith filed Responses on April 11, 2017. (ECF Nos. 125, 126). The Foundation filed a Reply on April 20, 2017. (ECF No. 128).

         When reviewing a motion to dismiss for failure to state a claim, the purpose is “to test the sufficiency of a complaint, ” not to “resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999) (quoting Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992)). A complaint fails to state a claim if it does not contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Rule 8(a)(2), or does not “state a claim to relief that is plausible on its face, ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). Though the plaintiff is not required to forecast evidence to prove the elements of the claim, the complaint must allege sufficient facts to establish each element. Goss v. Bank of Am., N.A., 917 F.Supp.2d 445, 449 (D.Md. 2013) (quoting Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012)), aff'd sub nom., Goss v. Bank of Am., NA, 546 F.App'x 165 (4th Cir. 2013).

         A court must examine the complaint as a whole, consider the factual allegations in the complaint as true, and construe the factual allegations in the light most favorable to the plaintiff. Albright v. Oliver, 510 U.S. 266, 268 (1994); Lambeth v. Bd. of Comm'rs of Davidson Cty., 407 F.3d 266, 268 (4th Cir. 2005) (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). But, the court need not accept unsupported or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979), or legal conclusions couched as factual allegations, Iqbal, 556 U.S. at 678.

         Smith filed her Counterclaim pro se. Pro se pleadings are liberally construed and held to a less stringent standard than pleadings drafted by lawyers. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (quoting Estelle v. Gamble, 429 U.S. 97, 106 (1976)); accord Brown v. N.C. Dep't of Corr., 612 F.3d 720, 722 (4th Cir. 2010). Pro se complaints are entitled to special care to determine whether any possible set of facts would entitle the plaintiff to relief. Hughes v. Rowe, 449 U.S. 5, 9-10 (1980). But even a pro se complaint must be dismissed if it does not allege “a plausible claim for relief.” Forquer v. Schlee, No. RDB-12-969, 2012 WL 6087491, at *3 (D.Md. Dec. 4, 2012) (citation and internal quotation marks omitted).

         Smith's Motions to Dismiss for Failure to State a Claim

         Smith first argues that the Foundation's claims against her should be dismissed because COIL has properly revived its corporate charter with the Maryland State Department of Assessments and Taxation, making COIL-rather than Smith-the proper Defendant. The Foundation argues that Smith remains the proper Defendant because under COIL's by-laws, COIL improperly revived its charter. The Foundation also asserts that Smith violated COIL's by-laws by taking unauthorized actions and misappropriating funds. Both Smith and the Foundation, however, rely on facts outside of the Amended Complaint: for Smith, the revival of COIL's charter; for the Foundation, the content of COIL's by-laws. The parties, then, are attempting to “resolve contests surrounding the facts” rather than addressing the “sufficiency of the complaint, ” which is inappropriate at this stage of the case. See Edwards, 178 F.3d at 243-44.

         Smith further contends that the Foundation's claims are moot because the Sign was removed from the building before the Foundation filed suit against Smith. The Foundation maintains that the Sign was not removed until May 2016, approximately six months after the Foundation filed the Complaint. Again, Smith and the Foundation rely on facts outside of the Complaint to assert when the Sign was removed: The Foundation relies on deposition testimony describing when the Sign was removed; Smith states baldly in her Motion that the Sign was removed before the Foundation filed the Complaint. Such arguments are likewise inappropriate at this stage of the case because both assertions directly ...


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