Roof Maxx Techs. v. Holsinger
| Decision Date | 16 August 2021 |
| Docket Number | 2:20-cv-03154 |
| Parties | ROOF MAXX TECHNOLOGIES, LLC, Plaintiff, v. PRESTON HOLSINGER, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION & ORDER
This matter is before the Court on a Partial Motion to Dismiss by Plaintiff and Counterclaim Defendant Roof Maxx Technologies, LLC (“Roof Maxx”) and Third-Party Defendants Michael Feazel and Todd Feazel (the “Feazels”) (collectively, the “Roof Maxx Litigants”). (ECF No. 22). The Roof Maxx Litigants move to dismiss Counts I, II, IV, and V of the Counterclaim and Third-Party Complaint, which was brought by Defendants and Counterclaim Plaintiffs H&H Shingle Savers, LLC (“Shingle Savers”) and Preston Holsinger (collectively, the “Shingle Savers Litigants”). (ECF No. 11). For the following reasons, the Court DENIES the Roof Maxx Litigants' motion.
Roof Maxx describes itself as an Ohio limited liability company and national distributor of a soy-based liquid product that is sprayed on asphalt shingle roofs to extend the life of the shingles (the “Product”). (Compl. ¶¶ 1, 10, ECF No. 1-1). Roof Maxx enters into agreements with dealers across the country, who then typically become exclusive dealers of the Product for a specific geographic region. (Id. ¶ 11).
On January 16, 2019, Roof Maxx entered into an agreement with Preston Holsinger (the “Exclusive Dealership Agreement”). (Id. ¶ 11). The Exclusive Dealership Agreement's initial term was one year, and it provided for automatic renewal for successive one-year terms, unless the agreement was terminated. The Agreement also contained a covenant not to compete, which prohibited Mr. Holsinger from conducting business competitive to Roof Maxx “for a period of five (5) years from and after the termination of [the] Agreement . . .” (ECF No. 1-1 ¶ 18). Additionally, on July 27, 2019, Roof Maxx, Mr. Holsinger, and Shingle Savers entered into an Addendum to the Exclusive Dealership Agreement (“Addendum”). (Compl., Ex. 2). The Addendum reaffirmed the Exclusive Dealer Agreement and added Shingle Savers as an exclusive dealer. (ECF No. 1-1 ¶¶ 13-14). Mr. Holsinger is the sole member of Shingle Savers, which is a Pennsylvania limited liability company. (Id. ¶ 3).
The Shingle Savers Litigants sent Roof Maxx a letter on May 1, 2020, giving notice of their termination of the August 2019 Agreement (the “Termination Letter”). (Compl., Ex. 3). In the Termination Letter, Shingle Savers explained it was rescinding the agreement due to alleged misrepresentations by Roof Maxx. (ECF No. 1-1 ¶ 4). Roof Maxx responded to the Termination Letter on May 4, 2020, denying the alleged misrepresentations, and arguing that the agreement and its covenant not to compete remained in effect. (Id. ¶ 24).
On May 21, 2021, Roof Maxx filed a lawsuit against Mr. Holsinger and Shingle Savers in the Franklin County Court of Common Pleas. Roof Maxx alleged a single claim, seeking declaratory judgment on the enforceability of the Exclusive Dealership Agreement and its covenant not to compete. (Id. ¶ 35). The Shingle Savers Litigants removed the case to the Southern District of Ohio on June 22, 2020. (ECF No. 1).
After the case was removed, the Shingle Savers Litigants then answered the Complaint and filed Counterclaim and a Third-Party Complaint against Roof Maxx and its owners, Michael Feazel and Todd Feazel, on July 28, 2020. (ECF No. 11). In the Third-Party Complaint and Counterclaim, Shingle Savers allege the following: fraudulent inducement or misrepresentation against Roof Maxx and Michael D. Feazel (Count One); breach of contract against Roof Maxx (Count Two); declaratory judgment regarding the enforceability and applicability of the Exclusive Dealership Agreement against Roof Maxx (Count Three); false advertising under the Lanham Act, 15 U.S.C. § 1125(A) against Roof Maxx and the Feazels (Count Four); and violation of the Ohio Deceptive Trade Practices Act, Ohio Rev. Code § 4165.02 (“ODTPA”) against Roof Maxx and the Feazels (Count Five).
According to Shingle Savers, the Roof Maxx Litigants enticed Mr. Holsinger to sign the Exclusive Dealership Agreement by falsely representing that two generations of the Product were patented. (Countercl. ¶¶ 1-2, ECF No. 11). Shingle Savers submits that the Roof Maxx Litigants knew the patent lapsed in December of 2014 due to their failure to pay the patent maintenance fees. (Id. ¶¶ 2, 18-23). Mr. Holsinger learned of the misrepresentations in early 2020. (Id. ¶ 57).
Around the same time, the Shingle Savers Litigants allege that the Roof Maxx “started imposing system-wide operational directives upon dealers that fundamentally changed the relationship between the parties, in contravention of their written agreements.” (Id. ¶ 58). The directives ordered Shingle Savers to take down its website and convert to a microsite, to set up auto-purchases and auto-billing, and to agree to a new strict payment plan. (Id.¶¶ 59-60). Roof Maxx imposed an automatic fine policy for any deal that did not comply. (Id.). Roof Maxx also “threatened to take away Shingle Savers' territories and give them to another dealer if Shingle Savers did not agree to the new payment plan.” (Id. ¶ 60). Shingle Savers alleges that the purpose of the new payment plan was to force out some dealers so that Roof Maxx could resell their territories. (Id.). According to Shingle Savers, Roof Maxx's misrepresentations and its attempt to impose additional material obligations caused Shingle Savers to terminate and rescind the agreement. (Id. ¶ 61). The parties were engaged in confidential negotiations when Roof Maxx filed its Complaint without notice.
On October 5, 2020, the Roof Maxx Litigants filed a partial motion to dismiss Counts One, Two, Four, and Five of Shingle Savers' Counterclaim and Third-Party Complaint. (ECF No. 22). This motion is now fully briefed and ripe for review.
Under Rule 12 of the Federal Rules of Civil Procedure, a party may move to dismiss any count of a complaint due to the opponent's “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A “motion to dismiss for failure to state a claim is a test of the plaintiff's cause of action as stated in the complaint, not a challenge to the plaintiff's factual allegations.” Golden v. City of Columbus, 404 F.3d 950, 958-59 (6th Cir. 2005). Consequently, the Court must construe the complaint in the light most favorable to the non-moving party, accept all factual allegations as true, and make reasonable inferences in favor of the non-moving party. Scooter Store, Inc. v. SpinLife.com, LLC, 777 F.Supp.2d 1102, 1109 (S.D. Ohio 2011) (citing Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008)). The Court is not required, however, to accept as true mere legal conclusions that are not supported by factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
Accordingly, although liberal, the Rule 12(b)(6) standard requires more than the bare assertion of legal conclusions to survive a motion to dismiss. Allard v. Weitzman, 991 F.2d 1236, 1240 (6th Cir. 1993) (citation omitted). The complaint must “give the defendant fair notice of what the claim is, and the grounds upon which it rests.” Nader v. Blackwell, 545 F.3d 459, 470 (6th Cir. 2008) (quoting Erickson v. Pardus, 551 U.S. 89, 93 (2007)). While a complaint need not contain “detailed factual allegations, ” its “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 545. A complaint that suggests “the mere possibility of misconduct” is insufficient because the complaint must state “a plausible claim for relief.” Iqbal, 556 U.S. at 679 (citing Twombly, 550 U.S. at 556).
When a plaintiff's claim sounds in fraud, the plaintiff must also satisfy Federal Rule of Civil Procedure 9(b) to survive a motion to dismiss. Rule 9(b) requires that, “in any complaint averring fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 563 (6th Cir. 2003) (quoting Fed.R.Civ.P. 9(b)). The requirement “reflects the rulemakers' additional understanding that, in cases involving fraud and mistake, a more specific form of notice is necessary to permit a defendant to draft a responsive pleading.” In re EveryWare Global, Inc. Sec. Litig., 175 F.Supp.3d 837, 849 (S.D. Ohio 2016) (quoting United States ex rel. SNAPP, Inc. v. Ford Motor Co., 532 F.3d 496, 504 (6th Cir. 2008) (internal quotation marks omitted)). In the analysis that follows, the Court will specify which claims sound in fraud and therefore must satisfy the more stringent requirements of Rule 9(b).
As required by Federal Rule of Civil Procedure 12(c), the Court accepts as true the factual allegations set forth in the pleadings at issue here: the Shingle Savers Litigants' Counterclaim and Third-Party Complaint. With respect to their claim of fraudulent inducement or misrepresentation, the Shingle Savers Litigants allege that Roof Maxx and Michael Feazel knowingly and falsely told Shingle Savers that the Product was subject to an active, valid patent. Shingle Savers' claim of fraudulent inducement or misrepresentation is subject to the heightened particularity pleading standard of Rule 9(b).
The Roof Maxx Litigants argue that Shingle Savers' fraud claim should be dismissed because it fails to meet the Rule 9(b) requiremen...
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