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LSR, Inc. v. Satellite Restaurants Inc.

United States District Court, D. Maryland

September 5, 2018

LSR, INC. t/a JERRY'S SEAFOOD, Plaintiff,


          Richard D. Bennett United States District Judge.

         This case arises from a dispute between Plaintiff LSR, Inc., trading as Jerry's Seafood (“Jerry's Seafood” or “Plaintiff”), and Satellite Restaurants Inc. Crabcake Factory USA (“Crabcake Factory” or “Defendant”) regarding alleged trademark infringement and unfair competition by the Defendant. Pending now is Defendant's Motion to Void Charter Document (ECF No. 18). The parties' submissions have been reviewed, and no hearing is necessary. See Local Rule 105.6 (D. Md. 2016). For the reasons set forth below, Defendant's Motion (ECF No. 18) is DENIED for lack of subject-matter jurisdiction.


         Plaintiff initially filed suit on September 5, 2017. (See No. RDB-17-2561, ECF No. 1.) After the Defendant filed a motion to dismiss, which alleged that Plaintiff was a Maryland corporation with a forfeited charter, the Plaintiff voluntarily dismissed the initial action without prejudice on December 19, 2017. (No. RDB-17-2561, ECF Nos. 14, 16.)

         On December 15, 2017, Plaintiff filed “Articles of Revival” to obtain an approved charter from the State of Maryland Department of Assessments and Taxation (“SDAT”). (ECF No. 8-2.) The Articles of Revival state that “the corporation has … [p]aid all state and local taxes, except taxes on real estate, and all interest and penalties due by the corporation or which would have become due if the charter had not been forfeited whether or not barred by limitations.” (ECF No. 8-2.) That same day, SDAT accepted the Articles of Revival and issued the Plaintiff a “Certificate of Status, ” which states Jerry's Seafood is in good standing with the State. (ECF No. 8-3.)

         On December 18, 2018, the Plaintiff initiated the instant action asserting trademark infringement and unfair competition claims against the same Defendant for using Plaintiff's THE CRAB BOMB Mark. (ECF No. 1.) Count One asserts that Defendant infringed Plaintiff's trademark under 15 U.S.C. § 1125(a). (Id. ¶¶ 26-34.) Count Two alleges trademark infringement under 15 U.S.C § 1114. (Id. ¶¶ 35-42.) Count Three alleges common law trademark infringement (id. ¶¶ 43-47), and Count Four alleges common law unfair competition (id. ¶¶ 48-54). On January 8, 2018, the Defendant filed a Motion to Stay, contending that the Plaintiff fraudulently revived its corporate status, a requirement for standing. (ECF No. 7 (citing Atlantic Mill & Lumber Realty Co. v. Keefer, 179 Md. 496 (1941)).) On February 15, 2018, this Court ordered the action be stayed for 60 days to enable the Defendant to challenge the Plaintiff's corporate status with the SDAT. (ECF No. 10.)

         On February 21, 2018, the Defendants filed a challenge to the validity of LSR's Articles of Revival with the SDAT. (ECF No. 11-1.)[1] On April 18, 2018, the Plaintiff filed an affidavit in support of the Articles of Revival with the SDAT. (ECF No. 18-1.) On May 18, 2018, the SDAT filed a “No-action Letter” stating that “the department received an Affidavit in response to this notice . . . Consequently, the Department will take no further action in this matter unless a court of competent jurisdiction orders the Department to take further action.” (ECF No. 18-2.)

         Defendant filed the pending Motion to Void Charter Document (ECF No. 18) on June 15, 2018, asking this Court to exercise jurisdiction over the validity of the Articles of Revival, find them to be improperly filed with SDAT and not in conformance with state law, and thus declare them void. This motion has been fully briefed. (ECF Nos. 19, 20.)


         Before filing a responsive pleading or motion to dismiss, Defendant's “Motion to Void Charter Document” asks this Court to grant relief in the form of a declaratory judgment that the Plaintiff's Articles of Revival are null and void under Maryland law. According to the Defendant, this Court is “a court of competent jurisdiction” that may determine the validity of Plaintiff's charter document. (ECF No. 18 at 2 (citing Md. Code, Corporations & Associations, § 1-201.1(e)(1)).) The Defendant contends, without citation to any authority, that this Court “has jurisdiction over the matter of Plaintiff's standing and any issues bearing on or affecting its standing (including whether the Articles of Revival should be voided).” (Reply, ECF No. 20 at 3.) Plaintiff argues that Defendant's challenge must be filed in a Maryland circuit court and that the challenge constitutes judicial review of an agency decision, for which the 30-day statute of limitations period has now run. (P.'s Opp'n, ECF No. 19.)

         To quickly address Plaintiff's argument that Defendant must file in state court, the statute merely says that a person “may file a petition in the circuit court . . ..” Md. Code Ann, Corps. & Ass'ns § 1-201.1(f)(1) (emphasis added). As this language is permissive, not restrictive, the statute does not prohibit a person from filing in federal court. The Defendant's claim, however, arises under Maryland law, so this Court would only have jurisdiction over the claim through supplemental jurisdiction.[2] The Defendant, as the party asserting the claim, holds the burden of establishing jurisdiction. Robb Evans & Assocs., LLC v. Holibaugh, 609 F.3d 359, 362 (4th Cir. 2010).

         This Court has supplemental jurisdiction “over all other claims that are so related to claims in the action within [the Court's] original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a). The United States Court of Appeals for the Fourth Circuit has explained that supplemental jurisdiction is governed in part by the following test:

The state and federal claims must derive from a common nucleus of operative fact. But if, considered without regard to their federal or state character, a plaintiff's claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues, there is power in federal courts to hear the whole.

Axel Johnson, Inc. v. Carroll Carolina Oil Co., 145 F.3d 660, 662 (4th Cir. 1998) (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966)) (emphasis added); accord. Rosmer v. Pfizer Inc., 263 F.3d 110, 116 (4th Cir. 2001) (finding that § 1367 codified the Gibbs test), rehearing denied,272 F.3d 243 (4th Cir. 2001). Supplemental claims “may be separate claims, or they may merely be different ‘counts' or ‘grounds' or ‘theories' in support of what is essentially a single claim.” White v. ...

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