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JTH Tax, Inc. v. Aime

United States District Court, E.D. Virginia, Norfolk Division

July 29, 2016

JTH TAX, INC., d/b/a LIBERTY TAX SERVICE, et al., Plaintiffs,
v.
GREGORY AIME, et al., Defendants.

          JTH Tax, Inc., Plaintiff, represented by O'Kelly Edward McWilliams, III, Gordon & Rees LLP, Patrick Kevin Burns, Gordon & Rees LLP & Peter G. Siachos, Gordon & Rees LLP, pro hac vice.

          SiempreTax LLC, Plaintiff, represented by O'Kelly Edward McWilliams, III, Gordon & Rees LLP, Patrick Kevin Burns, Gordon & Rees LLP & Peter G. Siachos, Gordon & Rees LLP, pro hac vice.

          Gregory Aime, Defendant, represented by David Caldwell Hartnett, Crenshaw Ware & Martin PLC & W. Ryan Snow, Crenshaw Ware & Martin PLC.

          Wolf Ventures, Inc., Defendant, represented by David Caldwell Hartnett, Crenshaw Ware & Martin PLC & W. Ryan Snow, Crenshaw Ware & Martin PLC.

          Aime Consulting, LLC, Defendant, represented by David Caldwell Hartnett, Crenshaw Ware & Martin PLC & W. Ryan Snow, Crenshaw Ware & Martin PLC.

          Aime Consulting, Inc., Defendant, represented by David Caldwell Hartnett, Crenshaw Ware & Martin PLC & W. Ryan Snow, Crenshaw Ware & Martin PLC.

          OPINION AND ORDER

          HENRY COKE MORGAN, Jr., Senior District Judge.

         This matter is before the Court on Plaintiff JTH Tax, Inc. d/b/a Liberty Tax Service and SiempreTax LLC's ("Plaintiff"[1]) Motion for a Temporary Restraining Order and a Preliminary Injunction Should Not Issue ("the Motion").[2] Doc. 7. In a Report and Recommendation ("R&R"), the Magistrate Judge RECOMMENDED that the Motion be GRANTED IN PART. Doc. 16. Defendants Gregory Aime, Aime Consulting, LLC, Wolf Ventures, Inc., and Aime Consulting, Inc. ("Defendants") object to the R&R. Doc. 18. For the reasons below, the Court OVERRULES Defendants' objections and ADOPTS the Magistrate Judge's R&R. Doc. 16.

         I. BACKGROUND

         A. Facts[3]

         Plaintiff is a tax preparation company. R&R at 2. Defendants have been franchisees of at least nine (9) Liberty Tax and SiempreTax locations since about 2011. Id . In about January 2016. Plaintiff learned that the internal Revenue Service ("IRS") revoked the Electronic Filing Identification Number ("EFIN") for Defendants' franchise locations as a consequence of Defendants' activities. Doc. 8 at 3. Defendants were required to maintain the EFIN under their franchise agreements with Plaintiff. Id .; see Doc. 6, Exs. A, B, C, D. E, F, (3, H, 1. Plaintiff could have terminated the franchise agreements under the terms of the contract, but instead executed a Purchase and Sale Agreement ("PSA") with Defendants and gave them until May 8, 2016 to regain their EFIN and buy back the locations. Doc. 6, Ex. L ¶ 4.

         Plaintiff seeks a temporary restraining order, alleging that Defendants:

(1) refused to assign leases for the franchise locations to the Plaintiff, (2) refused to return confidential proprietary tiles and records, including customer lists, related to the operation of the franchise locations, (3) refused to transfer the franchise assets to Plaintiff, (4) failed to return Plaintiff's confidential operations manual and other business information, and (5) indicated their intent to operate a competing tax preparation business using Plaintiff's confidential information.

         R&R at 2. Plaintiff also seeks a preliminary injunction. Doc. 7 at 2.

         B. Procedural History

         On June 9, 2016, Plaintiff filed a Complaint in this Court. Doc. 1. On June 22, Plaintiff filed an Amended Verified Complaint to acid Aime Consulting, Inc. as a Defendant. Doc. 6. Plaintiff also filed the Motion on June 22. Doc. 7. On June 30, 2016. Defendants tiled a Response in Opposition to the Motion. Doc. 13. On July 1. Plaintiff tiled two declarations in support of the Motion. Docs. 14, 15. Also on July I. Judge Leonard held a hearing on the temporary restraining order ("TRO") and filed an R&R RECOMMENDING that the Court GRANT IN PART Plaintiff's Motion for a TRO as to six (6) of the nine (9) Liberty Tax and SiempreTax franchise locations in Defendants' control. R&R at 6-8; see id. at 2.[4] The R&R also required objections to be filed within seven (7) days and responses to objections to be filed within seven (7) days. Id. at 9. On July 8. Defendants filed five (5) objections to the MR. Doc. 18. On July 15, Plaintiff tiled a response to Defendants' objections. Doc. 20. On July 15, Defendants' counsel waived service for all Defendants.[5] Doc. 22.

         II. ...


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