Renfinity, Inc. v. Jones
| Decision Date | 10 March 2022 |
| Docket Number | Civil Action 3:20-CV-00422-KDB-DSC |
| Parties | RENFINITY INC., Plaintiff, v. MATTHEW JONES, MSD ENTERPRISES LLC, and MIL-SPEC ENGINEERING LLC, Defendants. |
| Court | U.S. District Court — Western District of North Carolina |
MEMORANDUM AND RECOMMENDATION
THIS MATTER is before the Court on “Defendants' Motion to Dismiss, ” (Doc. 7) filed Sept. 30, 2020.
The Motion has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1) and is now ripe for the Court's consideration.
Having fully considered the arguments, the record, and the applicable authority, the undersigned respectfully recommends that “Defendants' Motion to Dismiss, ” (Doc 7) be granted in part and denied in part. Plaintiff's “Motion for Sanctions, ” (Doc 13) is denied as moot.
These facts are incorporated in relevant part from District Judge Kenneth D. Bell's previous Order (Doc. 31). Renfinity Inc. designs, manufactures, and integrates cyber-secure common access protocols, asset management, wireless communication products and specialized industry solutions for organizations. Doc. 1 at 3. Defendant MSD Enterprises LLC (“MSD”) is a limited liability company organized under the laws of Texas with its principal place of business there. Doc. 1 at 5. Its sole member is Defendant Matthew Jones, who is the manager of the company and a resident of Texas. Id. Defendant Mill-Spec Designs LLC, also a Texas company, was dissolved in 2020 and is no longer in existence. Id.
Renfinity alleges that in April 2014, it engaged Jones/MSD to assist in the development of software and hardware for its “Secure Grid” product, a network that allows users to track and protect assets, people, equipment and documents in real time. Doc. 1 at 6. But according to Renfinity, Defendants never intended to complete the sale. Doc. 1 at 1. Renfinity contends that rather than develop the products as agreed, Defendants fraudulently bilked them out of more than $500, 000 by sending prototypes developed and owned by an unrelated company in 2017 and 2018. Id. Defendants also sent numerous communications falsely reporting progress and/or delays in the non-existent development of their products. Doc. 1 at 15-16. In its Complaint, Renfinity asserts claims against all Defendants for violations of Civil RICO, 18 U.S.C. § 1964(c), fraud, breach of contract, unfair trade practices under North Carolina law, N.C. Gen. Stat. § 75-1.1, unjust enrichment, and conversion.
Defendants moved to dismiss the Complaint on grounds that the Court lacks personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and venue is improper under Federal Rule of Civil Procedure 12(b)(3). Defendants further allege that Plaintiff failed to maintain a certificate of authority to conduct business in North Carolina and that the Complaint fails to state claims under Federal Rule of Civil Procedure 12(b)(6). Judge Bell issued an Order on Feb. 3, 2022 finding that this Court has personal jurisdiction over Defendants. The case was remanded to the undersigned for a recommendation on the remaining claims.
Defendants argue that venue is improper because none of them are subject to personal jurisdiction in this district. This issue is moot since Judge Bell concluded this Court has personal jurisdiction. Doc. 31 at 1. Venue is proper when the action is brought in:
28 U.S.C. § 1391(b).
Venue is proper here because a “substantial part of the events . . . giving rise to the claim occurred” here. Defendants sent prototypes and directed correspondence into this district. They also provided information for purposes of allowing Plaintiff to secure investors at meetings to be held in this state. Judge Bell concluded that Defendants purposefully availed themselves of the privilege of conducting business here through their deliberate conduct and communications directed into this district.
For those reasons, the undersigned respectfully recommends that the Motion to Dismiss for improper venue be denied.
Defendants argue Plaintiff's claims should be dismissed because it never obtained a Certificate of Authority to transact business in North Carolina. “A foreign corporation may not transact business in this State until it obtains a certificate of authority from the Secretary of State. N.C. Gen. Stat. § 55-15-01. A corporation who fails to obtain a Certificate of Authority prior to conducting business may not “maintain any action or proceeding in any court of this State” unless the certificate is obtained “prior to trial.” N.C. Gen. Stat. § 55-15-02. See also Automotive Dent Technology, Inc., v. Warren, 2017 WL 2684053 at *3 (M.D. N.C. June 21, 2017) (denying Defendant's motion to dismiss for failure to obtain a Certificate of Authority because Plaintiff obtained the certificate prior to “any trial of its claims.”
Since Plaintiff has until trial to obtain a Certificate of Authority from the Secretary of State, the undersigned respectfully recommends that the Motion to Dismiss for failure to obtain Certificate of Authority be denied.
In reviewing a Rule 12(b)(6) motion, “the court should accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff.” Mylan Labs. Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993); see Priority Auto Grp., Inc. v. Ford Motor Co., 757 F.3d 137, 139 (4th Cir. 2014). The plaintiff's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.” Id. at 563. A complaint attacked by a Rule 12(b)(6) motion to dismiss will survive if it contains enough facts to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570); see Robinson v. Am. Honda Motor Co., Inc., 551 F.3d 218, 222 (4th Cir. 2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.
In Iqbal, the Supreme Court articulated a two-step process for determining whether a complaint meets this plausibility standard. First, the court identifies allegations that, because they are no more than conclusions, are not entitled to the assumption of truth. Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555) (alleging that government officials adopted a challenged policy “because of” its adverse effects on the protected group was conclusory and not assumed to be true). Although the pleading requirements stated in “Rule 8 [of the Federal Rules of Civil Procedure] mark [] a notable and generous departure from the hyper-technical, code-pleading regime of a prior era . . . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 678-79.
In Iqbal, the Court determined that Rule 8 “demands more than an unadorned, the defendant-unlawfully-harmed-me-accusation” Id. at 678. This “plausibility standard” requires “more than a sheer possibility that a defendant has acted unlawfully.” Id. Thus, a complaint falls short of the plausibility standard where a plaintiff pleads “facts that are ‘merely consistent with' a defendant's liability. Id.; see E. Shore Mkts. Inc. v. J.D. Assocs., LLP, 213 F.3d 175, 180 (4th Cir. 2000) ().
Second, to the extent there are well-pleaded factual allegations, the court should assume their truth and then determine whether they plausibly give rise to an entitled to relief. Iqbal, 556 U.S. at 679. “Determining whether a complaint contains sufficient facts to state a plausible claim for relief “will . . . be context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. “Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not ‘show[n]' - ‘that the pleader is entitled to relief, '” and therefore should be dismissed. Id. (quoting Fed.R.Civ.P. 8(a)(2)).
The sufficiency of the factual allegations aside, “Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law.” Sons of Confederate Veterans v. City of Lexington, 722 F.3d 224, 228 (4th Cir. 2013) (quoting Neitzke v. Williams, 490 U.S 319, 327 (1989)). Indeed, where “it is clear that no relief could be granted under any set of facts that could be proved consistent with the...
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