United States District Court, W.D. Virginia
K. MOON UNITED STATES DISTRICT JUDGE.
Tyler (“Plaintiff”), acting pro se,
initiated this case, seeking declaratory and injunctive
relief for allegations of trademark infringement by Cashflow
Technologies, Inc. (“Defendant”), as well as
damages “in excess of $150, 000” based upon
claims of defamation, libel per se, unfair
competition, and unjust enrichment. (Dkt. 1 at 18). This case
arises out of the use of the term “Cashflow” in
the title of a mobile phone application created by Plaintiff,
which Defendant believes violates one or more of its
trademarks. (Dkts. 1 & 4).
filed an Answer, Defenses, and Counterclaim to
Plaintiff's Complaint. The counterclaim named Plaintiff
and NDL, Inc. (“NDL”), which is owned by
Plaintiff, as counter defendants. (Dkt. 4). Defendant's
counterclaim alleges trademark infringement and unfair
competition in violation of 15 U.S.C. § 1125(a), common
law trademark infringement, and common law unfair
competition. (Dkt. 4 at 12-13). In addition, Defendant seeks
a declaratory judgment that its actions were not defamatory,
libelous, or unfairly competitive, as well as an injunction
prohibiting NDL from using “Cashflow” as the name
of its software. (Dkt. 4 at 15- 16).
matter is before the Court upon NDL's and Plaintiff's
motions to dismiss all counterclaims pursuant to Rule
12(b)(6). (Dkts. 11 & 15). NDL's motion was also
styled as a motion for summary judgment. (Dkt. 15). Lastly,
Plaintiff filed a motion for sanctions against Defendant.
on the pleadings and the applicable case law, the motions to
dismiss will be denied in part and granted in part.
Defendant's counterclaims of trademark infringement and
unfair completion will be retained because they state a claim
upon which relief can be granted. Defendant's declaratory
judgment counterclaims, however, will be dismissed as
duplicative. Defendant's declaratory judgment
counterclaims are merely defenses masquerading as
counterclaims; they ask the Court to essentially rule in
Defendant's favor on the merits of Plaintiff's
claims. That is not the purpose of a declaratory judgment,
and thus the declaratory judgment claims will be dismissed.
Because genuine issues of material fact remain and additional
discovery would aid in resolving such issues, NDL's
motion for summary judgment is premature and will be denied.
Lastly, Plaintiff's motion for sanctions will be denied
because Defendant's counterclaims are not frivolous.
Motion to Dismiss A motion to dismiss pursuant to
Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of a
complaint to determine whether the plaintiff has properly
stated a claim; “it does not resolve contests
surrounding the facts, the merits of a claim, or the
applicability of defenses.” Republican Party of
North Carolina v. Martin, 980 F.2d 943, 952 (4th Cir.
1992). Although a complaint “does not need detailed
factual allegations, a plaintiff's obligation to provide
the ‘grounds' of his entitle[ment] to relief
requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007) (internal citations omitted).
need not “accept the legal conclusions drawn from the
facts” or “accept as true unwarranted inferences,
unreasonable conclusions, or arguments.” Eastern
Shore Markets, Inc. v. J.D. Assocs. Ltd. P'ship, 213
F.3d 175, 180 (4th Cir. 2000). “Factual allegations
must be enough to raise a right to relief above the
speculative level, ” Twombly, 550 U.S. at 555,
with all allegations in the complaint taken as true and all
reasonable inferences drawn in the plaintiff's favor.
Chao v. Rivendell Woods, Inc., 415 F.3d 342, 346
(4th Cir. 2005). Rule 12(b)(6) does “not require
heightened fact pleading of specifics, but only enough facts
to state a claim to relief that is plausible on its
face.” Twombly, 550 U.S. at 570. Consequently,
“only a complaint that states a plausible claim for
relief survives a motion to dismiss.” Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009).
Motion for Summary Judgment
judgment is warranted if the Court concludes that no genuine
issue of material fact exists for trial and that the moving
party is entitled to judgment as a matter of law, based on
the totality of the evidence, including pleadings,
depositions, answers to interrogatories, and affidavits.
Whiteman v. Chesapeake Appalachia, L.L.C., 729 F.3d
381, 385 (4th Cir. 2013) (citing Fed.R.Civ.P. 56). A genuine
issue of material fact exists “if the evidence is such
that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986).
demonstrate that a genuine issue of material fact exists, a
party may not rest upon his own mere allegations or denials.
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
Rather, the party must “proffer sufficient proof, in
the form of admissible evidence, that could carry the burden
of proof of his claim at trial.” Mitchell v. Data
Gen. Corp., 12 F.3d 1310, 1316 (4th Cir. 1993). To this
end, a district court has an “affirmative obligation .
. . to prevent ‘factually unsupported claims [or]
defenses' from proceeding to trial.” Felty v.
Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir.
1987) (quoting Celotex, 477 U.S. at 323-24).
Motion for Sanctions
Rule 11(c)(2) of the Federal Rules of Civil Procedure, a
party may ask the Court to issue sanctions against another
party who violates Rule 11(b). The Fourth Circuit has held
that the primary purpose of Rule 11 is to “deter future
litigation abuse.” Hunter v. Earthgrains Co.
Bakery, 281 F.3d 144, 151 (4th Cir. 2002).
Rule 11(b) imposes four different requirements upon
litigants. See Fed. R. Civ. P. 11(b)(1)-(4).
Although Plaintiff does not cite as specific section in his
motion, two of the four requirements appear relevant to
Plaintiff's motion. When a lawyer submits a document to
the court, he or she certifies that:
to the best of [his or her] knowledge, information, and
belief, formed after an inquiry reasonable under the
circumstances: . . . (2) the legal contentions are warranted
by existing law or by a nonfrivolous argument . . . and (3)
the factual contentions have evidentiary support or . . .
will likely have evidentiary support after a reasonable
opportunity for further investigation or discovery.
Fed. R. Civ. P. 11(b).
evaluate alleged Rule 11(b)(2) violations using an objective
reasonableness standard. A legal argument fails to satisfy
Rule 11(b)(2) when “a reasonable attorney in like
circumstances could not have believed his actions to be
legally justified.” Morris v. Wachovia Securities,
Inc., 448 F.3d 268, 277 (4th Cir. 2006). The legal
argument must have absolutely no chance of success under the
existing precedent to contravene the rule. Id.
factual allegations that are wholly “unsupported by any
information obtained prior to filing” will fail to
satisfy Rule 11(b)(3). Brubaker v. City of Richmond,
943 F.2d 1363, 1373 (4th Cir. 1991). While certain legal
claims may not survive a motion to dismiss, a sanction under
Rule 11 is entirely different. Id. “Only the
lack of any legal or factual basis is sanctionable.”
Hunter, 281 F.3d at 153. In dicta, this
Court agreed, “neither the certification requirement on
evidentiary support, nor Rule 11 in its entirety, ”
requires that a party proves its case before filing a
complaint or another ...