Surratt v. Brown, 15 CVS 1551
| Decision Date | 27 July 2015 |
| Docket Number | 15 CVS 1551 |
| Citation | 2015 NCBC 72 |
| Court | Superior Court of North Carolina |
| Parties | JOSEPH LEE SURRATT, Plaintiff, v. MITCHELL KENDALL BROWN; MITCHELL KENDALL BROWN d/b/a DÉJÀ VU TATTOO AND PIERCING; MITCHELL KENDALL BROWN d/b/a SIGNATURED SOULZ; and TATTOO THERAPY, LLC, Defendants. |
Wilson Helms & Cartledge, LLP by G. Gray Wilson and Matthew W. Georgitis for Plaintiff.
Norman L. Sloan for Defendants. Gale, Chief Judge.
James L. Gale, Chief Special Superior Court Judge.
{1} THIS MATTER is before the Court on Defendants' Motion to Dismiss, made pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure ("Rule(s)"), and Defendants' Motion to Drop [Strike] Certain Defendants, made pursuant to Rule 21 ("Motion to Strike"). For the reasons stated below, the Motion to Dismiss is GRANTED IN PART and DENIED IN PART and the Motion to Strike is DENIED.
{2} The current litigation follows the voluntary dismissal of an earlier action filed on April 1, 2013 ("First Action").
{3} In the First Action, Plaintiff Joseph Lee Surratt ("Surratt") initiated an individual action against Defendant Mitchell Kendall Brown ("Brown") and made claims against the following entities: Déjà Vu Tattoo and Piercing, LLC; Signatured Soulz of Greensboro, LLC; Mitchell Kendall Brown d/b/a Déjà Vu Tattoo and Piercing of Greenville; and Déjà Vu Franchise Group, LLC. After the case was designated a complex business case and assigned to the undersigned, Plaintiff voluntarily dismissed Déjà Vu Tattoo and Piercing, LLC; Signatured Soulz of Greensboro, LLC; and Déjà Vu Franchise Group, LLC without prejudice on July 22, 2013. Plaintiff dismissed all remaining claims in the First Action on February 20, 2015.
{4} On March 9, 2015, Plaintiff initiated the present action ("Second Action") against Brown; Déjà Vu Tattoo and Piercing, LLC; Signatured Soulz of Greensboro, LLC; Déjà Vu Franchise Group, LLC; Tattoo Therapy, LLC; Mitchell Kendall Brown d/b/a Déjà Vu Tattoo and Piercing; and Mitchell Kendall Brown d/b/a Signatured Soulz. The Complaint alleges claims for (1) declaratory judgment, (2) conversion, (3) constructive trust, (4) breach of fiduciary duties, (5) misrepresentation, (6) breach of contract, (7) unfair and deceptive trade practices ("UDTP"), (8) actual and constructive fraud, (9) unjust enrichment, and (10) dissolution and accounting. The Second Action was designated a complex business case and assigned to the undersigned. On April 22, 2015, Plaintiff voluntarily dismissed Déjà Vu Tattoo and Piercing, LLC; Signatured Soulz of Greensboro, LLC; and Déjà Vu Franchise Group, LLC with prejudice.
{5} Defendants filed the Motion to Strike on May 1, 2015, and the Motion to Dismiss on May 6, 2015. As an alternative to the Motion to Dismiss, the Motion to Strike seeks to strike claims against the remaining entity Defendants, Mitchell Kendall Brown d/b/a Déjà Vu Tattoo and Piercing, Mitchell Kendall Brown d/b/a Signatured Soulz, and Tattoo Therapy, LLC ("the Moving Entity Defendants") from the Complaint, first on the basis that the first two entities do not exist and second because, in any event, Brown would be personally responsible for any liability that Surratt may prove.
{6} The Court held oral argument on the motions on June 17, 2015, at which Plaintiff's counsel indicated that he would not pursue his UDTP claim. Defendants' counsel reaffirmed statements in Defendants' brief that while Brown denies all allegations of the Complaint, if Plaintiff succeeds, Brown will be individually responsible for any liability Plaintiff succeeds in proving.
{7} The Court accepts the following facts alleged in the Complaint as true for purposes of the Motion to Dismiss. It considers other evidence of record when evaluating the Motion to Strike.
{8} The Complaint asserts two related but separate oral agreements. Surratt and Brown formed the first agreement in May 2010, when they orally agreed to open and operate a tattoo and piercing business ("the Business"), with Brown financing the Business in exchange for a thirty-percent share in its profits and Surratt opening and operating the Business for a seventy-percent share in its profits.
{9} Pursuant to this agreement, Surratt created the Déjà Vu name and logo and "was the party solely responsible for store design, logo design, and overseeing of the construction of the tattoo and piercing business storefront." (Compl. ¶ 15.) On November 4, 2010, the "Certificate of Partnership or Business Under Assumed Name in Forsyth County to Déjà Vu Tattoo and Piercing" was recorded in Forsyth County, listing Surratt and Brown as owners. (Compl. ¶ 11.) On May 5, 2011, articles of organization were filed for Déjà Vu Tattoo and Piercing, LLC, listing Surratt and Brown as members. The store opened at Hanes Mall in Winston-Salem, North Carolina on February 18, 2011.
{10} Surratt alleges that the second agreement was formed two months later, when Surratt and Brown agreed to expand their venture "by opening additional retail locations, of which Plaintiff and Defendant would each maintain 50% ownership." (Compl. ¶ 19.) At oral argument, Plaintiff's counsel indicated that this allegation should be interpreted to limit the scope of the agreement and the claim's application to the pursuit of additional tattoo storefronts that use the concept and related intellectual property that Surratt developed in connection with the first agreement. Surratt disclaims that the agreement prevents either partner from opening or operating any tattoo parlor that does not use that concept or related intellectual property.[1]
{11} Surratt alleges that, around this time, he requested that Brown distribute the Business's profits. Brown refused the request and made "several" transfers out of the checking account. (Compl. ¶ 21.)
{12} In July 2011, Surratt took a two-week absence from overseeing the Business, during which time Brown requested a new employer identification number for the Business, transferred all operating income and profits to his personal bank account, changed passwords to all accounts associated with the Business, and instructed the Business's employees not to communicate with Surratt because he was no longer part of the Business. Surratt was advised on his return in August 2011 that he would not be allowed in the Winston-Salem store.
{13} On March 17, 2012, Brown opened another tattoo and piercing retail storefront in Greensboro under the name Signatured Soulz of Greensboro, LLC. On September 18, 2012, Brown opened a third tattoo and piercing retail storefront in Greenville, North Carolina, using the name Déjà Vu Tattoo and Piercing. Surratt alleges that, on this same day, Brown formed Déjà Vu Franchise Group, LLC for the purpose of franchising the Déjà Vu concept. Within two years, Brown opened three more stores in Jacksonville, Fayetteville, and Winston-Salem, named Déjà Vu Tattoo and Piercing, Signatured Soulz, and Tattoo Therapy, LLC, respectively.
{14} Surratt contends that each of these six additional locations are subject to the parties' joint venture and were opened and operated using intellectual property that Surratt created as part of their venture, including the retail store layout, the design of the retail stores, and the store logo design.
{15} Surratt complains that Brown has refused to distribute profits to him or permit him to carry out his role as a member-manager of the LLC and partner of the partnership and has misappropriated intellectual property that Surratt created.
{16} On a motion to dismiss pursuant to Rule 12(b)(6), the Court inquires "whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory, whether properly labeled or not." Crouse v. Mineo, 189 N.C.App. 232, 237, 658 S.E.2d 33, 36 (2008) (quoting Harris v. NCNB Nat'l Bank of N.C. , 85 N.C.App. 669, 670, 355 S.E.2d 838, 840 (1987)). The Court may grant a motion to dismiss under Rule 12(b)(6) where one of the following is true: (1) the complaint on its face reveals that no law supports the plaintiff's claim; (2) the complaint on its face reveals the absence of facts sufficient to make a good claim; or (3) the complaint discloses some fact that necessarily defeats the plaintiff's claim. Oates v. JAG, Inc., 314 N.C. 276, 278, 333 S.E.2d 222, 224 (1985). For purposes of the Motion to Dismiss, the Court accepts the factual allegations of the Complaint as true without assuming the veracity of Plaintiff's legal conclusions. Walker v. Sloan, 137 N.C.App. 387, 392, 592 S.E.2d 236, 241 (2000).
{17} A trial court may review the developed record in deciding a motion under Rule 21. N.C. R. Civ. P. 21 cmt. ( that relevant language is "exact counterpart to federal Rule 21"); see also Hershey Foods Corp. v. Padilla, 168 F.R.D. 7, 9–11 (D.P.R. 1996) (); Johnson v. Johnson, 14 N.C.App. 40, 42, 187 S.E.2d 420, 421 (1972) .
{18} Defendants contend that (1) Plaintiff misjoined the Moving Entity Defendants because the first two entities named do not exist and never have existed; (2) Tattoo Therapy, LLC was not a part of the agreements between the parties; and, (3) in any event, Plaintiff is not in privity of contract with any of the entities. As noted, Defendant's counsel further asserts that Brown, individually, would be responsible for any liability Surratt is ultimately able to prove.
{19} Surratt counters that it is premature to dismiss the Moving Entity Defendants before discovery, and that Brown or his...
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