Ultimate Outdoor Movies, LLC v. Funflicks, LLC

          MEMORANDUM OPINION

          STEPHANIE A. GALLAGHER UNITED STATES MAGISTRATE JUDGE

         On July 27, 2018, Plaintiffs Ultimate Outdoor Movies, LLC and Laura Landers (“Plaintiffs”) filed suit against Defendants Charles Hunter, Matthew Dias, and FunFlicks Audiovisuals (collectively “the California Defendants”); Todd Severn and FunFlicks, LLC (collectively, “the Severn Defendants”); and James Gaither and NATJAY, LLC (collectively, “the Gaither Defendants”). ECF 1. On April 10, 2019, the Severn Defendants filed a Third-Party Complaint and a Motion for Preliminary Injunction against Darrell Landers (“Darrell Landers”) and his company, LND Technologies, LLC (“LND”) (collectively, “the Third-Party Defendants”). ECF 105, 106.

         Presently pending is the Third-Party Defendants' Motion to Dismiss the Third-Party Complaint. ECF 119. The Severn Defendants opposed the motion, ECF 132, and the Third-Party Defendants filed a Reply, ECF 139. Also pending is the Severn Defendants' Motion for Preliminary Injunction against the Third-Party Defendants. ECF 106. The Third-Party Defendants opposed the motion, ECF 118, and the Severn Defendants filed a Reply, ECF 131.

         The Court declines to hold a hearing on the Severn Defendants' Motion for Preliminary Injunction. A preliminary injunction hearing is “not required when no disputes of fact exist and the denial of the motion is based upon the parties' written papers.” Fundamental Admin. Servs., LLC v. Anderson, Civil No. JKB-13-1708, 2015 WL 2340832, at *1 (D. Md. May 13, 2015) (citing Aoude v. Mobil Oil Corp., 862 F.2d 890, 893-94 (1st Cir. 1988) (“an evidentiary hearing is not an indispensable requirement when a court allows or refuses a preliminary injunction”)). “[P]reliminary injunctions are denied without a hearing, despite a request for one by the movant, when the written evidence shows the lack of a right to relief so clearly that receiving further evidence would be manifestly pointless.” 11A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure § 2949 (3d ed. 2019). Here, the parties' written submissions do not raise a question of fact that must be resolved before the Court may rule on the Severn Defendants' motion. Thus, no hearing is necessary to resolve the motions. See Local Rule 105(6) (D. Md. 2018).

         For the reasons stated below, I shall deny both pending motions.

         I. Background^[1]

         This case is based on a dispute over an outdoor movie business known as FunFlicks. ECF 105 ¶ 17. Defendant Todd Severn (“Severn”) is the owner of Defendant FunFlicks, LLC of Maryland (“FF-Severn”). Id. ¶ 2. FF-Severn owned the FunFlicks brand for more than twelve years, until January 2013. Id. ¶ 18. During this time, FF-Severn licensed the FunFlicks brand to licensees nationwide. Id. ¶ 19. In or about 2008, FF-Severn entered a license agreement with Darrell Landers for the Austin, Texas territory. Id. ¶ 20. On or about June 18, 2010, Darrell Landers registered Fun Flicks Outdoor Movies of Texas, Inc. (“UOM”) as an entity in Texas. Id. ¶ 21. In 2011, Darrell Landers was a 60% owner of UOM, and his wife, Laura Landers, was a 40% owner.^[2] Id. ¶ 22.

         In or about 2012, Darrell Landers registered another entity, FunFlicks, Inc., in Texas, which was renamed LND Technologies, LLC on or about November 9, 2018 (“LND”).^[3] Id. ¶¶ 4, 6. Also in 2012, Darrell Landers and Laura Landers entered additional licensing agreements, through UOM, for additional cities, including Dallas, Houston, San Antonio, Oklahoma City, Tulsa, Memphis, Nashville, and Huntsville. Id. ¶¶ 23, 24. On or about December 31, 2012, Darrell Landers, through LND, entered into an Asset Sale and Purchase Agreement (“the APA”) to purchase the FunFlicks brand from FF-Severn for $2.5 million. Id. ¶ 25. Under the APA, FF-Severn held a Security Agreement, and LND made a down payment to FF-Severn, agreeing to pay the remaining balance of the $2.5 million purchase price under a Seller Take Back Financing Promissory Note (“the Note”). Id. ¶¶ 26, 27.

         In or around 2016, Laura Landers became the sole owner of UOM, and Darrell Landers became the “majority and/or sole owner” of LND. Id. ¶ 31. Around the same time, Darrell Landers and Laura Landers signed a 10-year non-monetary agreement between UOM and LND. Id. ¶ 32. In October, 2017, the Severn Defendants allege that LND defaulted on the Note, with roughly $2 million still owed. Id. ¶ 33. Thereafter, FF-Severn and LND began negotiating a restructuring of the APA. Id. ¶ 34. On or about December 21, 2017, after negotiations had deteriorated, FF-Severn exercised its rights under the Note to take back the FunFlicks brand from LND. Id. ¶¶ 35-46.

         Subsequently, FF-Severn sold FunFlicks to FunFlicks Audiovisuals (“FF-AV'), a Defendant in the underlying lawsuit, to satisfy the $2 million unpaid by LND, leaving a deficiency of approximately $500, 000.00. Id. ¶ 47. On March 3, 2018, the Severn Defendants executed a Release and Settlement Agreement (“the Release”) with Darrell Landers and LND, settling their dispute over the APA. Id. ¶ 52; ECF 105-1. The Release, attached as an exhibit to the Third-Party Complaint, was signed by Darrell Landers, individually and on behalf of LND, and by Severn, individually and on behalf of FF-Severn, all of whom are defined in the Release as “the Parties.” ECF 105-1 at 2-11. The “Mutual General Release” provision provides,

Each of the parties, through the undersigned, on behalf of themselves and their successors in interest, assigns, officers, shareholders, agents, employees, and partners, irrevocably and unconditionally releases and discharges each of the Parties of any and all contracts, agreements, promises, indebtedness, obligations, sums owed, liability, claims, and/or causes of action, including any claims for attorneys' fees, that they, he, or it may have, whether any of the foregoing are known or unknown, that in any way arise from or relate to the APA, the Seller Take Back Financing Note, the Security Agreement, and any associated agreements and instruments, the Default Notice, the Sale Notice, the Third Party Sale, the Deficiency, or any decision, event, act, transaction, agreement, contract, or occurrence that took place or was executed prior to the date of this Agreement. The Parties understand that this mutual release contained in this Agreement includes all claims they have ever had or may now have against any other Party up to the date of this Agreement, including but not limited to, all claims arising out of or related [sic] the Parties' business, relationship and/or agreements, all claims for breach of express or implied contract, and all other federal, state, or local statutory and/or common law claims. . . . Any and all claims or potential claims or causes of action that either Party has, may have, or that may arise in the future from events occurring after the date of this Agreement are not meant to be covered by the mutual general release of this Agreement. This is a general release for acts, agreements, events, and claims between the parties predating this Agreement.

Id. ¶ 8; ECF 105 ¶ 55. In addition, the Third-Party Defendants made affirmative covenants, representations, and warranties, including:

[T]he Landers Entities will not voluntarily aid, abet, collude with, or conspire with, any individual or entity with respect to bringing or litigating any claim or cause of action against the Severn Entities based on any conduct or event that occurred prior [to] the Effective Date of this Agreement…

ECF 105-1 ¶ 4(e); ECF 105 ¶ 54.

         On or about June 14, 2018, Darrell Landers sent an email to “darrell@funflicks.com, ” posing as a client seeking FunFlicks services. ECF 105 ¶ 60. On July 27, 2018, Laura Landers and UOM filed the underlying lawsuit against the Severn Defendants, among others, alleging damage to UOM's business, as a result of the Severn Defendants “actions and/or inactions involving their take back and re-sale of FunFlicks to FF-AV.” Id. ¶¶ 57, 58; see ECF 1. Plaintiffs filed an Amended Complaint on November 8, 2018, which included references to the Third-Party Defendants, as well as exhibits of emails and text messages from Darrell Landers regarding the APA negotiations, dated prior to March 3, 2018. ECF 105 ¶¶ 69-74; see ECF 21. In ...