Seale v. Peacock

• Decision Date: 27 April 2022
• Docket Number: 21-1144
• Citation: 32 F.4th 1011
• Parties: Bryan SEALE, an individual, Plaintiff - Appellant, v. Gary PEACOCK, an individual; and John Doe and/or Jane Doe, individuals whose true name(s) are unknown, Defendants - Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

32 F.4th 1011

Bryan SEALE, an individual, Plaintiff - Appellant,

v.Gary PEACOCK, an individual; and John Doe and/or Jane Doe, individuals whose true name(s) are unknown, Defendants - Appellees.

No. 21-1144

United States Court of Appeals, Tenth Circuit.

FILED April 27, 2022

Jared R. Ellis, Hall & Evans, LLC (Brian Molzahn with him on the briefs), Denver, Colorado, for Plaintiff – Appellant.

Andrew E. Swan, Leventhal Lewis Kuhn Taylor Swan PC (Michael D. Kuhn with him on the brief), Colorado Springs, Colorado, for Defendants – Appellees.

Before TYMKOVICH, Chief Judge, PHILLIPS, and McHUGH, Circuit Judges.

McHUGH, Circuit Judge.

This action involves two incidents targeting Appellant, Bryan Seale. First, in November and December 2017, someone sent anonymous letters containing personal and derogatory information about Mr. Seale to his acquaintances. Second, in December 2018, Mr. Seale discovered that someone had accessed his real estate business software account without authorization. Mr. Seale brought this action asserting claims against (1) his ex-husband and ex-employee, Gary Peacock, for accessing his real estate business account without authorization and (2) unnamed defendants for sending the anonymous letters.

The magistrate judge dismissed the claims in two separate orders. First, she granted with prejudice Mr. Peacock's motion to dismiss the claims alleged against him for failure to state a claim. Second, she denied Mr. Seale's motion to amend the complaint to substitute Mr. Peacock for the unnamed defendants and dismissed the remaining claims without prejudice. Mr. Seale appeals both orders. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm in part and reverse and remand in part.

I. BACKGROUND

A. Factual History¹

Mr. Seale and Mr. Peacock were real estate agents in Colorado. The two agents were previously married to each other, and Mr. Peacock previously worked for Mr. Seale. They divorced on May 4, 2017,² and Mr. Seale terminated Mr. Peacock's employment on June 29, 2018.³

1. Anonymous Letters

In November and December 2017, an unidentified person sent at least fifteen letters to Mr. Seale's acquaintances. The letters included statements about Mr. Seale's dating and sexual activity, explicit photographs of Mr. Seale, his profile from a dating website, and references to Mr. Seale's business. In November 2017, Mr. Seale received an anonymous letter like those sent to his acquaintances, but his also included a hostile note, saying, "Do you like breaking up families" and "my attorney will be getting a subpoena to you to testify in my divorce case." App. Vol. 1 at 160.

Subsequently, four real estate agents left Mr. Seale's company, three clients stopped doing business with Mr. Seale, and two non-profit agencies stopped their associations with Mr. Seale's business. Mr. Seale alleged the anonymous letters were intended to, and did, harm his reputation and business.

Mr. Seale reported the letters to the Colorado Springs Police Department and worked with the United States Postal Inspector to identify the sender. But, as of the time of filing the Amended Complaint, his efforts had not been successful and the sender remained unidentified.

2. Unauthorized Access to Mr. Seale's CTM Software Account

Mr. Seale used CTM Software ("CTM"), "an interactive real estate contract platform," to support his business. Id. at 158. The information on his CTM account included customers’ names, addresses, phone numbers, email addresses, birthdays, and social security numbers; emails sent and received by Mr. Seale; the status of his client relationships; complete contract history for his clients; and other client documents like bank account information, mortgage account information, lender relationships, personal settings, account details, and payment histories.

A feature of CTM enabled Mr. Seale to view the login history of the account. In doing so, he determined that someone other than himself had logged into his CTM account nineteen times on or about December 13, 2018. Of those, at least one access went through an IP address that belonged to Liberty Toyota on Woodmen Road in Colorado Springs, Colorado. The same day as that access, Mr. Peacock was at Liberty Toyota getting a vehicle serviced. Mr. Seale also discovered that someone other than himself had accessed his CTM account once on or about December 17, 2018, via an IP address that belonged to Mr. Peacock's employer at the time. According to Mr. Seale, Mr. Peacock was "[t]he only individual who had access to [Mr. Seale]’s CTM logon information." Id. at 159.

B. Procedural History

Mr. Seale filed a complaint against Mr. Peacock and unnamed John Doe and/or Jane Doe defendants in Colorado state court in November 2019. Mr. Peacock removed the action to the United States District Court for the District of Colorado based on diversity jurisdiction.⁴ Mr. Seale and Mr. Peacock consented to have a magistrate judge conduct all proceedings in the case.

After removal, Mr. Seale filed an Amended Complaint pursuant to Federal Rule of Civil Procedure 15(a)(1)(B). In the Amended Complaint, Mr. Seale alleged three claims against Mr. Peacock: statutory civil theft; violation of the Stored Communications Act, 18 U.S.C. §§ 2701 – 2713 ("SCA"); and invasion of privacy by appropriation of name or likeness. Mr. Seale also asserted claims against the unknown defendants for intentional infliction of emotional distress/outrageous conduct, invasion of privacy by intrusion into seclusion, invasion of privacy by public disclosure of private facts, and fifteen counts of libel per se. The magistrate judge dismissed the claims against the defendants in separate orders, beginning with the claims against Mr. Peacock.

1. Claims Against Mr. Peacock

Mr. Peacock moved to dismiss the three claims alleged against him in the Amended Complaint. He argued Mr. Seale had not alleged that Mr. Peacock intended to permanently deprive Mr. Seale of his property, as required to state a claim for civil theft. Mr. Peacock also argued that Mr. Seale failed to plausibly allege damages as required to support the remaining claims. In the Amended Complaint, Mr. Seale alleged he lost several business relationships after the letters were sent, and he stated, without explanation, that he suffered mental anguish from the invasion of his privacy.

As to the civil theft claim, the magistrate judge concluded allegations that Mr. Peacock accessed Mr. Seale's CTM account without authorization did not "support an inference that [Mr.] Peacock intended to permanently deprive [Mr. Seale] of his property." Id. at 263. As to the other two claims, the magistrate judge concluded Mr. Seale's statement that he suffered mental anguish "is a ‘bare assertion’ and a ‘[t]hreadbare recital[ ] of an element of the claim, which is unsupported and does not suffice at the pleading stage.’ " Id. at 264 (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). The magistrate judge also recognized that "any damages flowing from [the] letters are irrelevant to the access of the CTM account" because the letters were sent over a year before the unauthorized person accessed the CTM account. Id. at 264–65. For these reasons, the magistrate judge granted the motion and dismissed all three claims alleged against Mr. Peacock. Without additional explanation, she dismissed the claims with prejudice.

Mr. Seale moved to amend the dismissals to be without prejudice under Federal Rule of Civil Procedure 59(e) and moved for leave to further amend the complaint to remedy the deficiencies in the damage allegations. Before the magistrate judge could rule on these motions, Mr. Seale submitted another motion to amend the complaint to substitute Mr. Peacock in place of the unknown defendants. The magistrate judge denied the Rule 59(e) motion as premature and denied the first motion to amend as moot due to the second motion to amend.

2. Claims Against Unknown Defendants

Throughout the litigation, Mr. Seale tried to identify the person or persons who sent the disparaging letters. Over the course of a year, he brought four motions for an extension of time to serve the unknown defendants because his efforts to identify them had not yet been successful. In the final motion for an extension of time to serve the unknown defendants, Mr. Seale explained he was pursuing DNA analysis of the anonymous letters that had been delayed by the COVID-19 pandemic. He reported that the lab had finally completed the DNA testing and he expected the results soon. The magistrate judge granted a fourth extension but warned that if Mr. Seale failed "to serve the unknown defendants" by the new deadline, she would "dismiss the claims against the unknown defendants without prejudice pursuant to Fed. R. Civ. P. 4(m)." App. Vol. 2 at 36.

One week before the new deadline, Mr. Seale moved to amend the complaint because he "recently obtained additional factual information which ... forms the basis for naming an individual defendant in place of the unknown defendant(s)." Id. at 38. In the proposed amended complaint, Mr. Seale alleged he found a photograph of his computer tablet taken while it was displaying his dating website profile. That profile contained the explicit photograph included in the anonymous letters. Mr. Seale alleged the photograph of his tablet had a reflection of the device that took the photograph, which he claimed resembled Mr. Peacock's cell phone. Mr. Seale also alleged that Mr. Peacock showed Mr. Seale a copy of the explicit photograph during a therapy session in 2016. Thus, he sought to substitute Mr. Peacock for the unknown defendants as to the remaining claims.⁵

In reviewing the motion, the magistrate judge found Mr. Seale had not shown good cause for the amendment because the identifying information had been in his possession throughout the litigation and therefore, he had not acted diligently. She also determined he had not shown excusable neglect. Accordingly, the magistrate...