United States District Court, E.D. Virginia, Norfolk Division
JTH TAX, INC. d/b/a LIBERTY TAX SERVICE, Plaintiff,
CHARLES HINES, Defendant.
REBECCA BEACH SMITH, CHIEF JUDGE.
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.
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. 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.
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. 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.
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.
Motion for Leave to File
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
Motion to Dismiss
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.
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.
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.
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
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
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.
Choice of Law
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 ...