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JTH Tax, Inc. v. Hines

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

March 1, 2018

JTH TAX, INC. d/b/a LIBERTY TAX SERVICE, Plaintiff,
v.
CHARLES HINES, Defendant.

          MEMORANDUM ORDER

          REBECCA BEACH SMITH, CHIEF JUDGE.

         This matter comes before the court on the Plaintiff's, JTH Tax, Inc., d/b/a/ Liberty Tax Service ("Liberty"), motion to dismiss or, in the alternative, stay Defendant's counterclaim pending arbitration ("Motion to Dismiss") and Memorandum in Support, filed on September 18, 2017. ECF Nos. 88, 89. On September 28, 2017, the pro se Defendant, Charles Hines ("Hines") filed a "Memorandum and Initial Response to ECFs 88, 89, 90, and 91." ECF No. 92. On October 5, 2017, the matter was referred to United States Magistrate Judge Robert J. Krask, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Federal Rule of Civil Procedure 72(b), to conduct hearings, including evidentiary hearings, if necessary, and to submit to the undersigned district judge proposed findings of fact, if applicable, and recommendations for the disposition of the Motion to Dismiss. ECF No. 94. On October 10, 2017, the Plaintiff filed a Motion for Leave to File a Reply Brief After Deadline ("Motion for Leave to File"). ECF No. 98. On November 6, 2017, the Motion for Leave to File was also referred to United States Magistrate Judge Robert J. Krask.

         The United States Magistrate Judge's Report and Recommendations ("R&R") regarding both the Motion to Dismiss and the Motion for Leave to File was filed on December 15, 2017. ECF No. 120. First, the Magistrate Judge denied the Plaintiff's Motion for Leave to File. R&R at 4. Next, the Magistrate Judge recommended the Plaintiff's Motion to Dismiss be granted in part and denied in part. Id. at 29.[1] Lastly, the Magistrate Judge recommended that that the Plaintiff's alternative motion to stay be denied as moot, because all of the Defendant's counterclaims would be dismissed, either with or without prejudice. Id. Nonetheless, the Magistrate Judge recommended that the Plaintiff's alternative motion to stay be granted in part, because the arbitration clauses to which the Defendant agreed are enforceable. Id. The Magistrate Judge directed that the Defendant pursue any of his counterclaims dismissed without prejudice, to the extent he so desires, before an arbitrator, pursuant to the arbitration clauses in the franchise agreements. Id.

         By copy of the R&R of the Magistrate Judge, the parties were advised of their right to file written objections to the findings and recommendations made by the Magistrate Judge within fourteen (14) days from the date of the R&R's mailing to the objecting party. Id. at 29-30.[2] On January 9, 2018, the Defendant filed "Last Minute Motion for Leave of the Court to Extend the Delivery of Defendant's Reply to ECF 120 to Tuesday, January[] 9, 2018, " subject to defect. ECF No. 122 [hereinafter Def. Objs.]. The court subsequently lifted the defect and construed the Defendant's filing as the entirety of the Defendant's objections to the R&R. ECF No. 123.

         I. LEGAL STANDARDS

         Pursuant to Rule 72(b) of the Federal Rules of Civil Procedure, the court, having reviewed the record in its entirety, shall make a de novo determination regarding those portions of the R&R to which the Defendant has specifically objected. Fed.R.Civ.P. 72(b). The portions of the R&R to which no objections have been filed are reviewed by the court to ensure that there is no clear error on the face of the record. Fed.R.Civ.P. 72(b) advisory committee's note to 1993 addition. The court may accept, reject, or modify, in whole or in part, the recommendation of the Magistrate Judge, or recommit the matter to him with instructions. 28 U.S.C. § 636(b)(1).

         II. DISCUSSION

         A. Motion for Leave to File

         No objections were filed against the Magistrate Judge's denial of the Plaintiff's Motion for Leave to File. ECF No. 98; see R&R at 3-4. The Motion for Leave to File was submitted after the deadline to submit such a motion, in violation of Local Civil Rule 7(F)(1). Therefore, the Plaintiff's Motion for Leave to File is DENIED.

         B. Motion to Dismiss

         The Defendant's Second Amended Counterclaim ("SAC"), ECF No. 82, includes six (6) counts, many with multiple sub-counts, considered by the Magistrate Judge in his evaluation of the Plaintiff's Motion to Dismiss, ECF No. 88. The court will make de novo determinations regarding the findings and recommendations made for the counts to which the Defendant has objected. See supra Part I. As to the sections of the R&R to which no objections have been filed, the court will review the Magistrate Judge's findings and recommendations to ensure that no clear error appears on the face of the record. Id.

         For the reasons stated below, the court hereby OVERRULES the Defendant's objections to the R&R, and ADOPTS AND APPROVES IN PULL the findings and recommendations set forth in the R&R of the United States Magistrate Judge, filed on December 15, 2017. ECF No. 120.

         1. Factual History

         The Defendant makes two objections to the "Factual History" section of the R&R. First, the Defendant objects to the language in the R&R that "Liberty is in the business of selling franchises engaged in the preparation of tax returns." R&R at 2 (citing SAC ¶ 4; Compl. ¶ 7, ECF No. 1); see also Def. Objs. at 4-6. Second, the Defendant seems to dispute the factual statement that the Defendant operated three (3) Liberty kiosks located inside Walmart stores for four (4) months in 2014. See R&R at 2 (citing SAC ¶¶ 8-9); Def. Objs. at 8.

         These objections do not materially challenge any of the findings or recommendations made by the Magistrate Judge. Further the R&R's characterization of these facts is correct, based on the language used in the Complaint and the SAC. Therefore, the Defendant's objections to specific language used on page two (2) of the R&R are OVERRULED.[3]

         2. Procedural History

         The Defendant makes two objections to the "Procedural History" section of the R&R. First, the Defendant objects to the R&R's characterization of his "Motion to Stay or Pause this Case for Fourteen Additional Days, " ECF No. 93. See R&R at 3 ("[T]he Court denied Hines' motion to stay or pause the case for 14 days to allow Hines to file an additional opposition to Liberty's motion to dismiss."); Def. Objs. at 10. Such an objection does not materially challenge any of the findings or recommendations made by the Magistrate Judge.

         Second, the Defendant appears to object to this court's prior Order, ECF No. 84, which dismissed the Defendant's earlier counterclaim without prejudice, for failure to comply with the Federal Rules of Civil Procedure. See R&R at 2-3; Def. Objs. at 10, 16. This issue was resolved with the court's Order of August 24, 2017, and an objection to the present R&R is not an appropriate procedure for contesting that prior Order. Therefore, the Defendant's objections to both the specific language on page three (3) of the R&R and this court's Order of August 24, 2017, are OVERRULED.

         3. Choice of Law

         The Defendant makes several objections to the Magistrate Judge's findings regarding the appropriate law applicable to this case. First, the Defendant objects to the finding that the Virginia Retail Franchising Act does not apply to his counterclaims. See R&R at 6-7 (citing Va. Code Ann. § 13.1-559 (2009)); Def. Objs. at 10-11. After making a de novo determination, the court OVERRULES this ...


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