New Venture Holdings v. Devito Verdi, Inc., Civil No. 2:18cv370

• Decision Date: 21 March 2019
• Docket Number: Civil No. 2:18cv370
• Court: U.S. District Court — Eastern District of Virginia
• Parties: NEW VENTURE HOLDINGS, L.L.C. d/b/a The Dump, Plaintiff, v. DEVITO VERDI, INC., Defendant.

376 F.Supp.3d 683

NEW VENTURE HOLDINGS, L.L.C. d/b/a The Dump, Plaintiff,

v.DEVITO VERDI, INC., Defendant.

Civil No. 2:18cv370

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

Signed March 21, 2019

Brett Alexander Spain, Willcox & Savage PC, Norfolk, VA, for Plaintiff.

Clark James Belote, Kristan Boyd Burch, Hunter Wilmer Sims, Jr., Kaufman & Canoles PC, Norfolk, VA, for Defendant.

OPINION AND ORDER

Mark S. Davis, CHIEF UNITED STATES DISTRICT JUDGE

This matter is before the Court on a Motion to Dismiss filed by Defendant DeVito Verdi, Inc. ("Defendant" or "DeVito Verdi"), pursuant to Federal Rule of Civil Procedure 12(b)(2), or alternatively under Federal Rules of Civil Procedure 8, 9(b), and 12(b)(6). ECF No. 4. For the reasons stated below, Defendant's Motion to Dismiss for lack of personal jurisdiction is GRANTED. As a result, the Court does not reach a decision on the alternative bases for dismissal. The Court PROVIDES Plaintiff New Venture Holdings, LLC, doing business as The Dump ("Plaintiff" or "New Venture"), with leave to amend the Complaint to cure all defects within fifteen (15) days after the entry of this Order.

I. FACTUAL AND PROCEDURAL HISTORY¹

Plaintiff New Venture is a Virginia corporation and operates a chain of discount furniture stores under the trade name "The Dump." Compl., ECF No. 1 ¶¶ 1, 5. New Venture has "The Dump" stores located in Atlanta, Georgia; Chicago, Illinois; Dallas, Texas; Houston, Texas; Philadelphia, Pennsylvania; Phoenix, Arizona; Turnersville, New Jersey; Norfolk, Virginia; Hampton, Virginia; and Richmond, Virginia. Verdi Decl., ECF No. 6 ¶ 24. New Venture's business requires effective advertising and marketing; New Venture relies on television, radio, print media, its online website, and social media for its advertising. Compl. ¶¶ 5, 7. Prior to March 2018, New Venture relied on in-house resources and regional advertising agencies to carry out its advertising and marketing. Id. ¶ 6. Because of its growing national platform and a desire to improve marketing efforts, in late 2017 and early 2018, New Venture began looking for a national advertising agency to take over its advertising and marketing. Id. ¶ 8.

Defendant DeVito Verdi is a New York-based advertising agency. Id. ¶ 9. In 2018, New Venture and DeVito Verdi began discussions for DeVito Verdi to become New Venture's principal advertising agency. Id. ¶ 12. For several years prior to these discussions, DeVito Verdi had solicited New Venture's business. For instance, in 2014, Paul McCormick, DeVito Verdi's executive vice president of account management, sent an email to Brian Hostetler, vice president of marketing for New Venture, who was located in Virginia, about an advertising campaign DeVito Verdi had done for Tribe Hummus. Hostetler Decl. ¶ 9, ECF No. 10, Ex. B. On January 8, 2016, McCormick sent another email to Hostetler about a television commercial by DeVito Verdi that won an award. Id. DeVito Verdi also mailed a letter dated June 29, 2016 to New Venture's Virginia Beach office, which attaches images of advertisements it created for other companies including another retail furniture store. Id. ¶ 12(a), Ex. C. DeVito Verdi followed up on this letter with several telephone calls. In total, New Venture submitted records of 7 phone calls from 2017 and 2018. Id., Ex. D. DeVito Verdi also promotes its advertising and marketing services on its website, describing its capabilities and creative and production processes. Compl. ¶¶ 11-13.

During an early 2018 telephone call between New Venture and DeVito Verdi, the parties reached an agreement in principle, but E.J. Strelitz, the chief executive officer of New Venture, would not agree to hire DeVito Verdi until he personally met with DeVito Verdi. Verdi Decl. ¶ 13. Therefore, the parties held an inperson meeting at New Venture's store in Chicago, Illinois. Id. ¶ 14. At that meeting, the parties reached an agreement on DeVito Verdi's engagement as New Venture's advertising agency. Id.

Thereafter, DeVito Verdi drafted a letter agreement for the engagement and sent it to New Venture in Virginia. Id. ¶ 15. However, this was not the final contract. Following edits and further negotiation, New Venture put the agreement on its letterhead, and sent it back to DeVito Verdi in New York City, where DeVito Verdi executed the agreement on March 23, 2018 (the "Agreement"). Id. ¶ 16; Hostetler Decl. ¶ 15; Compl. ¶ 10.

The agreement provides that DeVito Verdi would provide work in four separate categories, with a flat monthly payment from New Venture for each category of work: (a) Strategy and Creative; (b) In-Store Communications Creative; (c) Public Relations and Social Media; and (d) Digital, Website Development, Optimization, SEO, SEM.² Agreement, ECF No. 1, Ex. 1.

The agreement further provides that New Venture must approve every advertisement and will own all finished product. Id. ¶ 1(a). It also states that New Venture must reimburse DeVito Verdi for out-of-pocket expenses, but only expenses authorized by New Venture. Id. ¶ 2. Moreover, it provides that New Venture will be responsible for booking all business travel, i.e. all travel was subject to Plaintiff's approval.

Pursuant to the agreement, DeVito Verdi commenced work for The Dump on or after March 26, 2018. Following the execution of the agreement, representatives of New Venture went to DeVito Verdi's offices in New York to discuss DeVito Verdi's work on two occasions. Verdi Decl. ¶ 21. Employees of DeVito Verdi visited New Venture's store in Philadelphia, Pennsylvania, and traveled to North Carolina to view how and where New Venture purchases its inventory. Id. ¶ 22. At no point did any DeVito Verdi employee visit Virginia. Id. ¶ 28. The parties exchanged several emails and telephone calls during their contractual relationship. Hostetler Decl. ¶ 8. New Venture submits copies of these emails. Id., Ex. 1. DeVito Verdi also provided New Venture with ideas for 15 and 30-second television commercials, Verdi Decl. ¶ 31, and samples of in-store advertisements for The Dump store in Chicago, id. ¶ 30.

On June 19, 2018, New Venture filed a complaint against DeVito Verdi in the Circuit Court for the City of Virginia Beach. Compl., ECF No. 1. Count I of the Complaint alleges breach of contract or in the alternative, unjust enrichment, id. ¶¶ 26-43; Count II alleges fraudulent inducement, id. ¶¶ 44-60; Count III alleges a breach of fiduciary duty, id. ¶¶ 61-65; and Count IV seeks a declaratory judgment that Defendant is in breach of its obligations and Plaintiff has no continuing obligations under the agreement, id. ¶¶ 66-68. On July 11, 2018, Defendant removed the action to this Court pursuant to 28 U.S.C. § 1441 et seq. Notice of Removal, ECF No. 1. On the same day, Defendant also filed a motion to dismiss in this Court. ECF No. 4. The motion and accompanying memorandum argue that the Court lacks personal jurisdiction over Defendant, and alternatively, that the Complaint fails to state claims upon which relief can be granted, as required by Rule 8 ; and as to Count II, argues that the Complaint fails to plead fraud with particularity as required by Rule 9(b). ECF No. 5. On August 3, 2018, Plaintiff filed a response. ECF No. 10. On August 9, 2018, Defendant filed a reply. ECF No. 11. The Court has reviewed the parties' submissions and concludes that a hearing is not necessary. Local Civil Rule 7(J); Fed. R. Civ. P. 78.

II. STANDARD OF REVIEW

A party may move to dismiss an action for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). "When a court's personal jurisdiction is properly challenged by a Rule 12(b)(2) motion, the jurisdictional question thus raised is one for the judge, with the burden on the plaintiff ultimately to prove the existence of a ground for jurisdiction by a preponderance of the evidence." Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989) ; New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir. 2005) (a plaintiff "bears the burden of proving to the district court judge the existence of [personal] jurisdiction over the defendant by a preponderance of the evidence.").

A court may resolve a 12(b)(2) motion in one of two ways. A district court may hold an evidentiary hearing, or may rule on the motion papers, supporting legal memoranda, and the relevant allegations in the complaint. Combs, 886 F.2d at 676 ; PBM Prods. v. Mead Johnson Nutrition Co., No. 3:09cv269, 2009 WL 3175665, at *2, 2009 U.S. Dist. LEXIS 93312, at *4 (E.D. Va. Sept. 29, 2009) ("[A] district court may look to both plaintiff and defendant's proffered proof.").

A plaintiff must make a prima facie showing of a sufficient jurisdictional basis to survive a motion to dismiss. New Wellington Fin. Corp., 416 F.3d at 294. To evaluate whether a plaintiff has made a prima facie showing of jurisdiction, the court " ‘must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction.’ " Id. (quoting Combs, 886 F.2d at 676 ); MJL Enterprises, LLC v. Laurel Gardens, LLC, No. 2:15cv100, 2015 WL 6443088, at *2 (E.D. Va. Oct. 23, 2015). In cases where "the defendant provides evidence which denies facts essential for jurisdiction, ‘the plaintiff must, under threat of dismissal, present sufficient evidence to create a factual dispute on each jurisdictional element which has been denied by the defendant and on which the defendant has presented evidence.’ " Colt Def., L.L.C. v. Heckler & Koch Def., Inc., No. 2:04cv258, 2004 U.S. Dist. LEXIS 28690, at *29-30 (E.D. Va. Oct. 22, 2004) (quoting Indus. Carbon Corp. v. Equity Auto & Equip. Leasing Corp., 737 F.Supp. 925, 926 (W.D.Va. 1990) ).

"In any motion pursuant to Rule 12(b)(2), the ultimate question is whether the plaintiff has proven that the Court has personal jurisdiction over the defendant."

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