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Lapham v. Trolley Pub of North Carolina, LLC

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

December 13, 2016

THOMAS LAPHAM, Plaintiff,
v.
TROLLEY PUB OF NORTH CAROLINA, LLC, et al., Defendants.

          MEMORANDUM OPINION

          HON. LIAM O'GRADY, UNITED STATES DISTRICT JUDGE

         In 2012, Thomas Lapham began investing in a nationwide trolley pub business venture. After a few years of unsuccessfully attempting to grow the business, Lapham became dissatisfied with the venture and, after a dispute arose, he sued his partners on theories of fraud and breach of contract. Lapham's initial complaint was dismissed without prejudice, and he filed an amended complaint on June 13, 2016. (Dkt. No. 12). Defendants then filed this motion to dismiss pursuant to Rule 12(b)(6). (Dkt. No. 13). For the reasons discussed below, this motion is hereby GRANTED.

         I. BACKGROUND

         A. Allegations in the Complaint

         On February 29, 2012, Jeff Murison and Kaapro & Cole Ventures, LLC ("K&C")- owned by Andrew Cole and Kai Kappro-executed an Operating Agreement for Trolley Pub of North Carolina, LLC ("TPNC"). K&C was "organized for the purpose of managing businesses that operate pedal-powered trolley tours in several locations throughout the United States, " and TPNC "was organized for the purpose of operating pedal-powered trolley tours in Raleigh, North Carolina." Pursuant to the Operating Agreement, Murison would contribute $40, 000 in return for a 27.78% ownership interest, and K&C would contribute the Trolley Pub logo, Trolley Pub trademark, Trolley Pub image and branding, know-how, marketing plans, technical information, supplier lists and information, financial plans, contractor and builder information, business plans, management commitment, software, design work in return for a 72.22% ownership interest.

         In late 2012 and early 2013, Thomas Lapham, Kaapro, and Cole "discussed joining together to build and operate a business offering pedal-powered tours of bars in cities and towns across the United States." These discussions included a phone conversation on February 1, 2013, in which they discussed opening a pub trolley business in Virginia, Maryland, DC, and Delaware. Lapham alleges that Kaapro and Cole made three promises during this phone call: (1) to provide Lapham with a 50% ownership interest in VA, MD, DC, and DE; (2) to contribute the Trolley Pub trademark, logo, branding, know-how, marketing plans, technical information, supplier information, financial and business plans, contractor and builder information, and software and design work (together, the "Trolley Pub Intangible Property") to the Trolley Pub Business; and (3) operate the Trolley Pub Business in VA, MD, DC, and DE. In return for these promises, Lapham promised to provide capital for the business. Latham alleges that a partnership or joint venture was formed as a result of these mutual promises.

         On February 4, 2013, Lapham and TPNC executed a Memorandum of Terms for a Proposed Business Partnership Agreement. In it, they "agree[d] to create a Virginia Limited Liability Company entitled Trolley Pub of Virginia, LLC which will engage in a business according to the business model discussed over the past month." Lapham would contribute $60, 000 in exchange for a 50% ownership interest and TPNC would contribute "the listed intellectual property, trade secrets, business knowhow/plans and perpetual commitments" in return for a 50% ownership interest. The agreement contained the following language regarding the intellectual property:

Intellectual Property developed in the course of the Venture is the property of the Venture. [TPNC's] Intellectual Property that is contributed to the Venture is licensed to the Venture and may only be used in conjunction with the course of business of the Venture. Licensed Intellectual Property is nonassignable. The Company shall contribute the following Intellectual Property and Trade Secrets to the Venture:
i. Trademark
ii. Branding
iii. Business Plans
iv. Financial Models
v. Strategies
vi. Marketing, design,
vii. Domain names
Viii. Other TBD

         The agreement was signed by Kai Kaapro, as Member/Managing ...


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