Maner v. Reproductive Research Technologies, LP et al, No. 4:2015cv01567 - Document 15 (S.D. Tex. 2015)

Court Description: MEMORANDUM OPINION AND ORDER granting in part and denying in part 9 MOTION to Dismiss Plaintiff's First Amended Complaint, granting in part and denying in part 10 MOTION to Dismiss (Partial) of First Amended Complaint and Motion for Additional Time to File an Answer. (Reproductive Research Technologies, LP's Answer due by 11/18/2015.) (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

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Maner v. Reproductive Research Technologies, LP et al Doc. 15 United States District Court Southern District of Texas ENTERED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION WILLIAM MANER, § § § § § § § § § § § § Plaintiff, v. REPRODUCTIVE RESEARCH TECHNOLOGIES, LP, JACK N. McCRARY, DR. ROBERT E. GARFIELD, and DR. RAINER FINK, Defendants. November 04, 2015 David J. Bradley, Clerk CIVIL ACTION NO. H-15-1567 MEMORANDUM OPINION AND ORDER William Maner ("Maner" Research Technologies, L.P. or "Plaintiff") sued Reproductive ("RRT"), Jack N. McCrary ("McCrary"), Dr. Robert E. Garfield ("Garfield"), and Dr. Rainer Fink ("Fink") (collectively, "Defendants"), pleading causes of action for breach of contract, and fraud. Fink's 1 quantum meruit, conspiracy, copyright infringement, Pending before the court are Defendants, McCrary and Motion to Dismiss Plaintiff's ("McCrary and Fink's Motion to Dismiss") First Amended Complaint (Docket Entry No. 9) and Defendant Reproductive Research Technologies, L. P. 's Motion for Partial Dismissal of Plaintiff's First Amended Complaint and Motion for Additional Time to File an Answer ("RRT's Motion for Partial Dismissal") (Docket Entry No. 10). For the reasons stated below, McCrary and Fink's Motion to Dismiss will be granted in part and 1 See Plaintiff's Original Complaint Docket Entry No. 1, pp. 5-8 ~~ 21-41. ("Original Complaint") , Dockets.Justia.com denied in part. RRT's Motion for Partial Dismissal will be granted in part and denied in part. RRT will be granted fourteen days from the date of this Memorandum Opinion and Order to file an answer. I. Factual Allegations This action involves an alleged breached employment contract and subsequent copyright infringement based on work Maner did for RRT. In Plaintiff's First Amended Complaint ("Amended Complaint") (Docket Entry No. 6), Maner alleges the facts set forth in the following three paragraphs. In December of 2010 Maner began working for RRT to draft the grant proposal and underlying testing protocol "for the testing of the Sure CALL® electromyographic ( "EMG") technology. " 2 RRT "by and through McCrary and (sic) officer of RRT," promised that RRT would employ Maner pursuant to the grant proposal's terms once grant funding was received "(the 'Contract') ." 3 Maner had a financial interest in RRT's project succeeding because he owned shares in Reproductive Health Technologies, ownership interest in RRT. 4 well, Inc. and RHT had an Garfield was a part-owner of RHT as and he allowed RHT to forfeit August 1, 2014. 5 ( "RHT") , its corporate existence on Maner was not informed, and "it is believed that 2 See Amended Complaint, Docket Entry No. 6, p. 3 ~ 11. 3 Id. at 3 ~ 12. 4 Id. at 4 ~ 13; 5 ~ 20. 5 Id. at 5 ~ 20. -2- RHT' s forfeiture is the Defendants ['] Mr. Maner out [of] RRT altogether." 6 "being a named co-inventor on continued attempt to cut Maner also had an interest in some of the numerous patent applications of the underlying technologies." 7 RRT did not pay Maner for his work on the grant proposal, but reimbursed "Contract." 8 him for gas expenses, as contemplated the The testing protocol and grant proposal were final- ized and then submitted for review in August of 2011. time, McCrary declined to hire Maner at RRT. to disclose under to the National Institute of 10 9 At that Defendants failed Health ("NIH") Grant Review Committee that Maner was no longer part of the RRT research team, which allowed NIH to "rely upon RRT's assertion that Mr. Maner was an integral part of the team requesting the grant." 11 Although the "Contract" and grant proposal required it, no one told Maner when the grant was awarded in June of 2012. 12 Maner discovered via RRT's website in March of 2014 that the grant had 6 Id. 7 Id. at 4 ~ 13. 8 Id. at 4 ~ 14. 9 Id. at 4 ~ 15. lOid. at 4 ~ 16. Id. at 4 ~ 17. "Mr. Maner was one of the most prominent and well-published Uterine EMG researchers. Defendants knew that they would have a better chance of receiving the grant with Mr. Maner's name and credentials behind the request." Id. 11 12 Id. at 4-5 ~ 18. -3- been awarded, and attempted to contact RRT regarding its failure to hire him or inform him that the grant had been awarded. 13 from RRT responded. 14 No one Maner also inquired about RHT's failure to send him a K-1 (tax form), and "[i]n or around October 28, 2013, Mr. Maner called the CFO of RHT and was informed that 'RHT filed K-1s early the year before and that a K-1 for 2013 money, the Amended was not required. ' " 15 Regarding the awarded grant Complaint states the following: 21. Upon further research, Dr. Fink's own curriculum vitae, under Major Funded Proposals on page 9, Exhibit B, states that the $149,197 awarded for Phase I of the grant was divided amongst Fink, McCrary and Williams in the amounts of $53,168, $65,551, and $30,459, respectively. However, the grants specified the [sic] McCrary would receive $0, a TBD software Programmer would receive $15, 000, John Williams would receive $33, 750, William Maner would receive $29,687, Linda Chambliss would receive $10,000, a TBD Nurse would receive $12,500, and $44,260 would be used for equipment, supplies, and other costs (Exhibit C) . Therefore, Fink and McCrary intentionally deviated from the submitted grant, failed to purchase equipment, cut Mr. Maner out of his position, and divided the majority of the grant monies among themselves, individually. 22. Further, Exhibit B reports the allocation of $1,148,472 in awarded funds for Phase II of the project. Again Fink and McCrary received far more than originally proposed, approximately 45% of the monies when the grant proposal called for them to receive approximately 3%. See Exhibit C, page[s] 20-22. 13 Id. at 4-5 ~~ 14 Id. a t 5 19 • fl ll 18, 19. -4- 23. Additionally, Phase II was not awarded until 2013, yet Exhibit B reports Mr. Maner as a recipient of grant monies, when he had not worked with RRT since 2011. 16 Maner also underlying asserts a testing employees thereof, Contract. " 17 registered protocol "which has without license, grant and been used by RRT, and in the due to RRT' s breach of the Based on these allegations, against each defendant for: meruit; copyright Maner asserts (1) breach of contract; claims (2) quantum (3) conspiracy; (4) copyright infringement; and (5) fraud, fraudulent inducement, and nondisclosure. 18 II. McCrary Procedural Background and Standards of Review and Fink (together) and RRT (individually) filed motions to dismiss Maner's Original Complaint on August 12, 2015, after which Maner amended his complaint. 19 McCrary and Fink now move to dismiss the Amended Complaint on two grounds. First, they Id. at 5-6 ~~ 21-23. See also Vita For Dr. Rainer J. Fink, Ph.D., Exhibit B to Amended Complaint ("Fink C.V."), Docket Entry No. 6-1; Automated Real-Time Uterine EMG Diagnostic by William Lawrence Maner ("Grant Proposal") , Exhibit C to Amended Complaint, Docket Entry No. 6-2. "A written document that is attached to a complaint as an exhibit is considered part of the complaint and may be considered in a 12(b) (6) dismissal proceeding." Ferrer v. Chevron Corp., 484 F.3d 776, 780 (5th Cir. 2007) . 16 ~ 17 Id. at 6 18 Id. at 6-10. 24. 19 See Defendants, McCrary and Fink's Motion to Dismiss Plaintiff's Original Complaint, Docket Entry No. 3; Defendant Reproductive Research Technologies, L. P. 's Motion for Partial Dismissal and Motion for Additional Time in Which to File An Answer, Docket Entry No. 4; Amended Complaint, Docket Entry No. 6. -5- argue that the court lacks subject-matter jurisdiction over the claims against them, and move to dismiss pursuant to Fed. R. Civ. P. 12(b) (1) 20 to Fed. Civ. R. Second, McCrary and Fink move to dismiss pursuant P. 12(b) (6) on the basis that Maner's Amended Complaint fails to state a claim on which relief can be granted. 21 RRT moves for dismissal of the conspiracy and fraud claims for failure to state a claim pursuant to Fed. R. Civ. P. 12(b) (6) . 22 A. Rule 12{b) {1) Standard of Review Federal courts are "courts of limited jurisdiction, having 'only the authority endowed by the Constitution and that conferred by Congress.'" Halmekangas v. State Farm Fire and Cas. Co., F.3d 290, (5th Rule 12(b) (1), 292 a Cir. claim 2010) is (citations 'properly omitted) . dismissed for 603 "Under lack of subject-matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate' the claim." In re FEMA Trailer Formaldehyde Prods. Liability Litig., 668 F.3d 281, 286 (5th Cir. 2012) (quoting Home Builders Ass'n, F.3d 1006, 1010 (5th Cir. 1998) Inc. v. City of Madison, 143 (internal citation omitted)). The party asserting federal subject-matter jurisdiction has the burden of showing that the jurisdictional requirement has been met. 20 See McCrary and Fink's Motion to Dismiss, Docket Entry No. 9, pp. 2-3. 21Id. 22 See RRT's Motion for Partial Dismissal, Docket Entry No. 10, pp. 1-2. -6- Alabama-Coushatta Tribe of Texas v. United States, 757 F.3d 484, 487 (5th Cir. 2014). "When facing a challenge to subject-matter jurisdiction and other challenges on the merits, we must consider first the Rule 12 (b) ( 1) jurisdictional addressing the merits of the claim." challenge Id. However, prior to "' [s] ubj ect matter jurisdiction is not defeated by the possibility that the complaint ultimately fails to state a claim.'" Energytec, Inc. v. Proctor, 516 F. Supp. 2d 660, 671 (N.D. Tex. 2007) v. Allstate Ins. Co., 314 F. 3d 776, 782 (citing Louque (5th Cir. 2002), cert. denied, 124 S. Ct. 54 (2003)). B. Rule 12(b) (6) Standard of Review Under Rule 8 of the Federal Rules of Civil Procedure a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." 8(a) (2). Fed. R. Civ. P. A Rule 12(b) (6) motion tests the formal sufficiency of the pleadings and is "appropriate when a defendant attacks the complaint because it fails to state a legally cognizable claim." Ramming v. United States, 281 F. 3d 158, 161 (5th Cir. 2001), cert. denied sub nom. Cloud v. United States, 122 S. Ct. 2665 (2002). The court must accept the factual allegations of the complaint as true, view them in a light most favorable to the plaintiff, draw all reasonable inferences in the plaintiff's favor. Id. and To defeat a motion to dismiss pursuant to Rule 12(b) (6), a plaintiff must plead "enough facts plausible on its face." to state a claim to relief that is Bell Atlantic Corp. v. Twombly, 127 S. Ct. -7- 1955, 1974 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference the defendant is liable Iqbal, 129 S. Ct. Ashcroft v. misconduct alleged." (2009) that (citing Twombly, 127 S. Ct. at 1965) . for the 1937, 1949 "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a unlawfully." a sheer possibility that Id. complaint pleads defendant's a defendant has (quoting Twombly, 127 S. Ct. at 1965). facts liability, it that are 'stops 'merely consistent short of the line acted "Where with' between possibility and plausibility of "entitlement to relief."'" (quoting Twombly, 127 S. Ct. at 1966). to dismiss, district courts are a Id. When considering a motion "limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint." Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010) . 23 McCrary and Fink and RRT did not attach anything to their respective motions to dismiss. See McCrary and Fink's Motion to Dismiss, Docket Entry No. 9; RRT's Motion for Partial Dismissal, Docket Entry No. 10. Maner attached a three-page Memorandum to Maner from McCrary dated December 14, 2010, with the subject "Project Planning (Modified after discussion)" (the "Project Memorandum") to both his responses. See Exhibit D to Plaintiff's Response to Defendants, McCrary and Fink's Motion to Dismiss Plaintiff's First Amended Complaint ("Response to McCrary and Fink's Motion to Dismiss"), Docket Entry No. 11-1; Exhibit D to Plaintiff's Response to Defendants Reproductive Research Technologies, L.P.'s Motion for Partial Dismissal of Plaintiff's First Amended Complaint ("Response to RRT' s Motion for Partial Dismissal"), Docket Entry No. 12-1. "When 'matters outside the (continued ... ) 23 -8- III. A. Analysis Defendants McCrary and Fink's Motion to Dismiss 1. The Court Has Subject-Matter Jurisdiction McCrary and Fink admit that the court has federal question subject-matter jurisdiction over the copyright infringement claims 23 ( • • • continued) pleadings' are submitted in support of or in opposition to a Rule 12(b) (6) motion to dismiss, Rule 12(b) grants courts discretion to accept and consider those materials, but does not require them to do so. Ace American Ins. Co. v. Huntsman Corp. , 255 F.R.D. 179, 188 (S.D. Tex. 2008) (citing Prager v. LaFaver, 180 F.3d 1185, 1188-89 (lOth Cir. 1999) and Isquith v. Middle S. Utils., Inc., 847 F.2d 186, 193 n.3 (5th Cir. 1988)). If the court chooses to do so, it must treat the Rule 12 (b) (6) motion as a motion for summary judgment under Rule 56. Id. (citing Fed. R. Civ. P. 12(d)). "A court exercises this discretion by determining whether the proffered material, and the resulting conversion from the Rule 12(b) (6) to the Rule 56 procedure, is likely to facilitate disposing of the action. Id. (citing Isqui th, 84 7 F. 2d at 193 n.3). "If the court refuses to consider those materials outside the pleadings, then the Rule 12(b) (6) motion remains intact and may be decided on its merits under the appropriate standard of review." Id. See also Gamel v. Grant Prideco, L.P., No. 15-20096, 2015 WL 5306554, at *2 (5th Cir. Sep. 11, 2015). Maner cites the Project Memorandum in both Responses in support of the same sentence: "In summary, McCrary induced Maner to work on the grant without pay by promising him a position once Phase I monies were awarded, where he was to work under Dr. Garfield for RRT. Response to McCrary and Fink's Motion to Dismiss, Docket Entry No. 11, p. 4 ~ 6; Response to RRT's Motion for Partial Dismissal, Docket Entry No. 12, p. 5 ~ 6. Maner also cites it in footnote 6 of his Response to RRT' s Motion to Dismiss: "As directors or senior management of RRT the individual would have known of Maner, the grant contents, and according to Dr. Fink's own CV, were beneficiaries of the change in the allocation of monies. Further, these individuals worked alongside Plaintiff and were copied on Exhibit D to Dkt #11, which set out the project." Response to RRT' s Motion to Dismiss, Docket Entry No. 12, p. 5 n. 6. The Project Memorandum discusses Maner's role in developing the grant proposal, not a promise of future employment. The court will not consider this attachment in its review of the 12(b) (6) motions to dismiss because it is not relevant to the motions to dismiss and considering it is not "likely to facilitate disposing of the action." See Ace American Ins., 255 F.R.D. at 188. 11 11 11 -9- against RRT. 24 They argue, however, that the Amended Complaint does not allege that either of them is personally liable for copyright infringement. 25 They also argue that the court "does not have, or should not choose to exercise, its supplemental jurisdictionn over the fraud and breach of contract state-law claims asserted against McCrary and Fink individually. 26 Maner alleges jurisdiction under federal copyright law because he pled that "Plaintiff is informed and believes that Defendants, without the permission or consent of Plaintiffs, has used, and continues to use, the Copyright Work and/or to make the Copyrighted Work available for distribution to others. n 27 Alternatively, Maner argues that the claims against McCrary and Fink form part of the same case or controversy as the copyright claims, and thus the court should exercise supplemental jurisdiction over these defendants. 28 a. Federal Question Jurisdiction "Courts may dismiss for lack of subject matter jurisdiction on any one of three different bases: complaint supplemented by (1) the complaint alone; undisputed facts 24 McCrary and Fink's Motion to Dismiss, 25 the record; or Docket Entry No. 9, See id. at 3-4. 26 in (2) the See id. at 2-3. p. 2. 27 See Response to McCrary and Fink's Motion to Dismiss , Docket Entry No. 11, p. 6 ~ 10 (citing Amended Complaint, Docket Entry No. 6 , p. 3 ~ 9) . 28 See id. at 7 ~ 14. -10- (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." F. 2d 736, 741 (5th Cir. Clark v. Tarrant County, Texas, 798 1986) . Rule 12 (b) ( 1) subject-matter jurisdiction come in two forms: and "factual" attacks. 523 (5th Cir. 1981). challenges to "facial" attacks See Paterson v. Weinberger, 644 F.2d 521, A facial attack consists of a Rule 12 (b) (1) motion unaccompanied by supporting evidence that challenges the court's jurisdiction based solely on the pleadings. Id. A factual attack challenges the existence of subject-matter jurisdiction in fact, and matters outside the pleadings - affidavits -may be considered. Id. such as testimony and Because McCrary and Fink have not submitted evidence outside Maner's pleadings in support of their motion to dismiss, the motion is a facial attack, and review is limited to whether the complaint sufficiently alleges jurisdiction. "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 u.s.c. § 1331. See also id. § 1338 (a) ("The district courts shall have original jurisdiction of any civil action arising copyrights under any Act of Congress relating to No State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to copyrights.") Complaint does not McCrary and Fink argue that the Amended suggest that -11- these individual defendants committed copyright infringement. 29 They argue that McCrary's only dealings with Maner were in the "course and scope" of McCrary's employment at RRT, and "[the Amended Complaint] says nothing whatsoever about any personal liability or culpability of [Fink] . " 30 Maner argues that " [t] he individual defendants are all either senior management, in charge of implementing the grant protocol, or corporate officers which would be contributory and/or vicarious liable infringement. " 31 for Maner argues that he pleaded that "Defendants, without the permission or consent of Plaintiffs, has used, and continues to use, the Copyrighted Work and/or to make the Copyrighted Work available for distribution to others." 32 "Cases have held that all participants in copyright infringement are jointly and severally liable as tortfeasors. A corporate officer may be held vicariously liable (1) if the officer has a financial stake in the activity and (2) if the officer has the ability and right to supervise the activity causing infringement." Fermata Int' l Melodies, Inc. v. Champions Golf Club, Inc., 712 F. Supp. 1257, 1262 (S.D. Tex. 1989), aff'd, 915 F.2d 1567 (5th Cir. 1990) (internal citations omitted). See also Broadcast Music, Inc. 29 See McCrary and Fink's Motion to Dismiss, Docket Entry No. 9, pp. 3-4. 30 See id. at 4. 31 Response to McCrary and Fink's Motion to Dismiss, Entry No. 11, p. 6 ~ 11. 32 ~ Id. ~ 10 (citing Amended Complaint, [3]9). -12- Docket Docket Entry No. 6, v. Tex Border Management, Inc., 11 F. Supp. 3d 689, 693-94 (N.D. Tex. 2014); Sanchez v. Hacienda Records and Recording Studio, Inc., No. H-11-3855, 2013 WL 529950, at *8 (S.D. Tex. 2013) ("A controlling corporate officer or shareholder may be vicariously liable for infringement along with his or her corporation, despite any immunity provided by state corporation law."). The Amended Complaint alleges that "RRT, and employees thereof" are using and distributing Maner's copyrighted work. 33 It also alleges that McCrary is the CEO of RRT, and Fink is part of senior management there. 34 Both of them were allegedly involved in developing the grant proposal, that "Plaintiff is and the Amended Complaint states informed and believes that Defendants have reproduced the Copyrighted Work and filed the Copyrighted Work with the National Institute of Health for the purpose of obtaining a grant and financial have stake subsequently in the supervise the activity. 35 received activity and such the grant," ability and showing a right to Because Maner has alleged facts capable See Amended Complaint, Docket Entry No. 6, p. 6 ~ ("Mr. Maner asserts a copyright, which has been duly registered, the grant and underlying testing protocol, which has been used RRT, and employees thereof, without license, due to RRT's breach the Contract."). 33 24 in by of See id. at 1-2 ~~ 2, 4; 10 ~ 52. See also Fink C. V., Exhibit B to Amended Complaint, Docket Entry No. 6-1, p. 1 (naming Fink "Chief Technology Officer, Reproductive Research Technologies, LP 2006-present"). 34 See Amended Complaint, Docket Entry No. 6, p. 8 ~ 40. See also id. at 5-6 ~~ 21-22; 9 ~ 44. See also Grant Proposal, Docket Entry No. 6-2, pp. 18-19. 35 -13- of establishing a claim for copyright infringement, this action is not subject to dismissal for lack of subject-matter jurisdiction. 36 b. Supplemental Jurisdiction 28 U.S.C. § 1367(a) states that "in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy II of the McCrary and Fink argue that even if the claims form part same case or controversy, the court should use its discretion to decline to exercise supplemental jurisdiction because "the only real basis for asserting individual claims is that these two gentlemen have a argue that "[t] his 'financial stake in the activity.'" 37 is hardly a sound basis for the They Court to 36 Maner also alleges that the court has subject matter jurisdiction "pursuant to 28 U.S.C. § 1332 as the amount in controversy exceeds $75,000, exclusive of interest and costs, and Defendant, Dr. Garfield is a citizen of Arizona, while Plaintiff and the other defendants are citizens of Texas." Amended Complaint, Docket Entry No. 6, p. 3 ~ B.c. Complete diversity is required for cases relying on diversity jurisdiction under 28 U.S.C. § 1332. Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008) (citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806)). "Complete diversity 'requires that all persons on one side of the controversy be citizens of different states than all persons on the other side.'" Id. Because Maner, the plaintiff, and McCrary and Fink, two of the defendants, are citizens of Texas, there is no complete diversity in this case. 37 McCrary and Fink's Motion to Dismiss, p. 4. -14- Docket Entry No. 9, exercise its supplemental jurisdiction as the same could be said for any shareholder of any corporation in America. " 38 As discussed above, the court has original jurisdiction over the copyright infringement claims against McCrary and Fink. The breach of contract and fraud claims stem from the same alleged acts and circumstances that led to the alleged copyright infringement. Thus, they derive from a "common nucleus of operative fact," and it is appropriate for the court to exercise supplemental jurisdiction over the state-law claims against these defendants. See Chicago v. Int'l College of Surgeons, (1997) 118 S. United Mine Workers of America v. (1966)) i Ct. 523, Gibbs, Donahue v. Tokyo Electron America, 529 86 S. Inc., Ct. (citing 1130, 1138 42 F. Supp. 3d 829, 839-41 (W.D. Tex. 2014). 2. Failure to State a Claim for Which Relief May Be Granted McCrary and Fink next argue that the Amended Complaint "still fails to state a plausible basis for claiming personal liability on the part of either of McCrary or Fink within the meaning of Iqbal, supra, and their progeny." 39 They argue that even if RRT failed to offer Maner a promised position, there are no specific allegations 38 Id. (citing 28 U.S.C. § 1367(c) (3) ("The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if . . . the district court has dismissed all claims over which it has original jurisdiction.")). 39 McCrary and Fink's Motion to Dismiss, p. 5. -15- Docket Entry No. 9, of wrongdoing by McCrary or Fink in their individual capacities. 40 Maner responds that when McCrary contracted with him McCrary did not have the intent to hire him. 41 individual defendants, knowledge of the fraud, Maner also argues that the "as beneficiaries of the fraud, and with can be held vicariously liable for the fraudulent acts of another." 42 a. Maner's Breach of Contract, Quantum Meruit, and Fraud Claims Against McCrary Are Not Subject to Dismissal. "A Rule 12(b) (6) motion to dismiss argues that, irrespective of jurisdiction, the complaint fails to assert facts that give rise to legal liability of the defendant." Willrich v. US Marshal's Office, No. 4:14-cv-561, 2015 WL 4776436, at *4 (E.D. Tex. Aug. 13, 2015). McCrary and Fink argue that the Amended Complaint contains no plausible basis for a claim against either defendant. 43 McCrary and Fink cite Haskett v. Continental Land Resources, LLC, No. G-140281, 2015 WL 1419731 (S.D. Tex. March 27, 2015), but that case is distinguishable. 44 There, the court held that "Plaintiff's speculations and opinions about a position he did not attain based on his 40 See id. 41 See Response to McCrary and Fink's Motion to Dismiss, Docket Entry No. 11, pp. 3-4. ~ 42 Id. 43 See McCrary and Fink's Motion to Dismiss, Docket Entry No. 9, at 5 8. p. 5. 44Id. -16- prior job experiences are not sufficient to sustain a plausible claim under the [Age Discrimination in Employment Act] that meets the Twombly and Iqbal WL 1419731, at *2. pleading standards." Haskett, 2015 In Haskett the issue was whether the position the plaintiff was allegedly not selected for was an independent contractor position or an employee position. See id. The plaintiff "[could not] point to any specific job for which he was an unsuccessful applicant." facts that support a Id. In contrast, Maner has provided claim that McCrary promised Maner future employment at RRT and did not honor that promise. 45 stated plausible claims for relief Maner has for breach of contract and quantum meruit against McCrary. While "failure to perform, standing alone, cannot establish fraudulent intent, slight circumstantial evidence of fraud, when considered with the breach of a promise to perform, is sufficient to support a finding Healthcare Corp. no pet.) 2002, S.W.2d 432 v. of Cottey, fraudulent 72 S.W.3d 735, (citing Spoljaric v. (Tex. 1986)); intent." see also 745 Columbia/HCA (Tex. App.-Waco Percival Tours, Arete Partners, Gunnerman, 594 F.3d 390, 394-95 (5th Cir. 2010) law on fraud and acknowledging this rule) . Inc., L.P. 708 v. (discussing Texas The Amended Complaint alleges that McCrary's representations were knowingly false and "used to induce Plaintiff to expend his time, 45 toil, and effort See Amended Complaint, Docket Entry No. 6, pp. 3, 9-10. -17- without compensation. " 46 Maner argues that the subsequent acts pleaded in the Amended Complaint are slight circumstantial evidence sufficient to support a fraud finding. 47 The Amended Complaint alleges that McCrary, as CEO of RRT, promised Maner an employment position if the grant proposal was successful, did not honor that contractual promise, and never intended to honor it. 48 It also alleges that McCrary failed to inform Maner when the grant was received and divided the grant monies differently than agreed to, and misrepresented Maner's association with RRT to the NIH when submitting McCrary the is plausible grant not proposal. 49 subject claim for to relief. Maner's dismissal See for Iqbal, fraud claim against failure 129 S. to Ct. state at a 1950. Accordingly, the motion to dismiss the breach of contract, quantum meruit, and fraud claims against McCrary will be denied. 50 b. Maner's Breach of Contract, Quantum Meruit, and Fraud Claims Against Fink Are Subject to Dismissal. In considering a Rule 12(b) (6) motion to dismiss, the court first identifies mere conclusory allegations and disregards them because they are not entitled to the assumption of truth. 46 Id. at 9 ~ Iqbal, 4 9. 47 See Response to McCrary and Fink's Motion to Dismiss, Docket Entry No. 11, pp. 3-5, 6-10. 48 See Amended Complaint, Docket Entry No. 6, pp. 3, 9-10. 49 See id. at 3-6. 50 See infra § III.B.2 for the discussion conspiracy claim against all Defendants. -18- regarding the 129 S. Ct. at 1940. The court then considers the well-pleaded factual allegations, assuming their veracity, and then determines "whether they plausibly give rise to an entitlement to relief." Id. at 1940-41. The Amended Complaint does not contain well-pleaded factual allegations of misconduct by Fink individually. Maner alleges that Fink received more money than he was entitled to under the original grant proposal terms; and, "[t]herefore, Fink and McCrary intentionally deviated from the submitted grant, failed to purchase equipment, cut Mr. Maner out of his position, and divided the majority of the grant monies among themselves, individually." 51 The rest of the Amended Complaint alleges generally that "Defendants" engaged in certain activities, but does not purport to show that Fink was personally involved. 52 Nothing pleaded indicates Fink made any promises to Maner, with or without intent to perform or for a purpose of deceiving. See Arete Partners, (citing Spoljaric, 708 S.W.2d at 432). 594 F.3d at 394-95 Maner has not pleaded facts specific to Fink's involvement in a breach of contract, meruit, or fraud. 51 53 quantum The Amended Complaint alleges facts that are See Amended Complaint, Docket Entry No. 6, pp. 5-6 ~~ 21-22. 52 The Amended Complaint only mentions Fink by name twice in the 14 paragraphs of facts. See id. at 3-6 ~~ 11-25. Both mentions are in conjunction with money received and divided in Phase I and Phase II of the project. Id. 53 See infra § III.B.2 for the discussion conspiracy claim against all Defendants. -19- regarding the "merely consistent with" Fink's liability, but "stop[] short of the line between possibility relief.'" See Iqbal, 8(a)(2). Accordingly, contract, quantum meruit, and plausibility 129 S. Ct. the motion of 'entitlement at 1949-SOi to Fed. dismiss R. the to Civ. P. breach of and fraud claims against Fink will be granted. c. Maner's Copyright Infringement Claim Against McCrary and Fink Is Not Subject to Dismissal. The only other claim asserted against McCrary and Fink is for copyright infringement. 54 The Amended Complaint Defendants "has used, and continues to use, alleges that the Copyrighted Work and/or to make the Copyrighted Work available for distribution to others" without Maner's permission or consent. 55 Specifically, the Amended Complaint alleges that the Defendants reproduced and filed the copyrighted work with the NIH. 56 Maner attached the Certificate of Registration for his copyrighted work, effective date April 13, 2014, to his Original Complaint. 57 54 He argues that McCrary and Fink See Amended Complaint, Docket Entry No. 6, pp. 7-9 ~~ 36-44. See id. at 8 ~ 39. See also discussion at§ III.A.l.a supra. Of course, the question of subject-matter jurisdiction is separate from the determination of whether a plaintiff has stated a valid claim for relief. See Smith v. Regional Transit Authority, 756 F.3d 340, 344 (5th Cir. 2014). 55 56 See Amended Complaint, Docket Entry No. 6, pp. 7-9 57 ~~ 36-44. See Certificate of Registration for Automated Real-Time Uterine EMG Diagnostic, Exhibit 1 to Original Complaint, Docket (continued ... ) -20- are vicariously liable for copyright infringement, as pleaded in the Amended Complaint. 58 McCrary and Fink's Motion to Dismiss does not specifically address the copyright claim. 59 "Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: ( 1) to reproduce the copyrighted work in copies or phonorecords; [and] (2) to prepare derivative works based upon the copyrighted work." 17 U.S.C. infringement, a plaintiff must § 106. To prove copyright establish ownership of a valid copyright and establish that the defendant copied that material. Baisden v. I'm Ready Productions, Inc., 693 F.3d 491, 499 (5th Cir. 2012) . "A corporate officer may be held vicariously liable [for copyright infringement] the activity and (2) supervise the (1) if the officer has a financial stake in if the officer has the ability and right to activity causing infringement." Fermata Int' l Melodies, 712 F. Supp. at 1262; see also Broadcast Music, Inc., 11 F. Supp. 3d at 693-94; Sanchez, 2013 WL 529950, at *8 ("A controlling corporate officer or shareholder may be vicariously 57 ( • • • continued) Entry No. 1-1, p. 1. Registration with the copyright office is not a prerequisite to copyright protection, but it is a prerequisite to maintaining an infringement lawsuit. See 17 U.S.C. § 411; see also Creations Unlimited, Inc. v. McCain, 112 F.3d 814, 816 (5th Cir. 1997) . 58 See Response to McCrary and Fink's Motion to Dismiss, Docket Entry No. 11, p. 6. 59 See McCrary and Fink's Motion to Dismiss, Docket Entry No. 9, p. 5. -21- liable for infringement along with his or her corporation, despite any immunity provided by state corporation law."). All partici- pants in copyright infringement are jointly and severally liable as tortfeasors. Maner Fermata Int'l Melodies, 712 F. Supp. at 1262. has pleaded that he owns a valid copyright, that Defendants copied his copyrighted work without his permission in order to obtain the grant, and that Defendants continue to use the copyrighted work. 60 See Baisden, 693 F.3d at 499. of RRT, and Fink is senior management at RRT. 61 a financial stake in the activity; for McCrary is CEO Both allegedly have instance, the Amended Complaint alleges that they both received part of the grant money when it was awarded. 62 See Fermata Int'l Melodies, 712 F. Supp. at 1262. Accepting these stated a plausible speculative level." factual claim for allegations as relief that true, rises See Twombly, 127 S. Ct. at 1965. Maner has "above the Accordingly, the copyright infringement claim is not subject to dismissal. B. Reproductive Dismissal RRT argues Research that the Technologies' court should Motion dismiss for the Partial fraud and conspiracy claims against it because the Amended Complaint fails to 60 See Amended Complaint, Docket Entry No. 6, p. 8. See id. at 2 ~ 4; Fink C.V., Exhibit B to Amended Complaint, Docket Entry No. 6-1, p. 1. 61 62 See Amended Complaint, Docket Entry No. 6, pp. -22- 5-6~~ 21-24. state plausible claims for relief on those causes of action. 63 Maner responds that he has pled sufficient facts to identify fraud on RRT's part and to identify the conspiracy. 64 1. Maner's Fraud Dismissal. RRT argues that Claim Maner Against has not RRT is met Not the Subject to particularity requirements for pleading fraud required by Fed. R. Civ. P. 9(b), and thus his fraud claim is subject to dismissal under Fed. R. Civ. P. 12(b) (6) for failure to state a claim. 65 Maner argues that RRT is vicariously liable for McCrary's actions and that the Amended Complaint provides specific facts that permit a reasonable inference that McCrary never intended to award Maner the job, therefore defrauding him. 66 Fed. R. Civ. P. 9(b) imposes a heightened pleading standard on fraud claims. See Williams v. Bell Helicopter Textron, Inc., 417 F.3d 450, 453 (5th Cir. 2005). Under this standard a party must state with particularity circumstances alleged to constitute fraud. See Campbell v. Bravo Credit, No. H-14-2794, 2015 WL 502234, at 63 See RRT's Motion for Partial Dismissal, Docket Entry No. 10, pp. 1-4. 64 See Response to RRT's Motion for Partial Dismissal, Docket Entry No. 12, pp. 2-6. 65 See RRT's Motion for Partial Dismissal, Docket Entry No. 10, p. 3. 66 See Response to RRT's Motion for Partial Dismissal, Docket Entry No. 12, pp. 3-5. -23- *5-*6 (S.D. Tex. Feb. 5, 2015). "This Circuit's precedent interprets Rule 9(b) strictly, requiring the plaintiff to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent." Fund, Inc. (internal v. TXU Corp., quotation marks Flaherty & Crumrine Preferred Income 565 and F.3d 200, citations 207 (5th omitted) . requires that plaintiffs plead enough facts Cir. 2009) "Rule 9 (b) to illustrate "the 'who, what, when, where, and how' of the alleged fraud.'" Carroll v. Fort James Corp., 470 F.3d 1171, 1174 (citing Bell Helicopter, 417 F.3d at 453). (5th Cir. 2006) A principal may be held liable for the fraudulent misrepresentations of its agent "'so long as the third person reasonably believed the agent was acting within the scope of his authority.'" 950, 953 (Tex. 1996) Scurlock Oil Co., NationsBank, N.A. v. Dilling, 922 S.W.2d (citing Bankers Life Ins. Co. of Nebraska v. 447 F.2d 997, 1004 n.12 (5th Cir. 1971)); see also Bohnsack v. Varco, L.P., 668 F.3d 262, 272-73 (5th Cir. 2012). The Amended Complaint alleges that McCrary, promised to give Maner a successful. 67 as CEO of RRT, job at RRT if the grant proposal was As discussed above, Maner argues that this, along with Defendant's alleged subsequent acts show a plausible claim for fraud. 67 68 The subsequent acts include McCrary failing to inform See Amended Complaint, Docket Entry No. 6, p. 3 68 ~ 12. See Response to RRT's Motion for Partial Dismissal, Docket Entry No. 12, pp. 3-5 ~~ 5-6. See also discussion at § III.A.2.a supra. -24- Maner when the grant was received while continuing to use his name in conjunction with the grant submission to NIH, the lack of response by RRT and RHT when Maner attempted to communicate with the the companies, fact that the grant money was divided differently than originally set out in the grant proposal, and the fact that Maner never received any grant money, despite being named as a recipient. 69 708 S.W.2d 432) See Cottey, 72 S.W.3d at 745 (citing Spoljaric, ("Although failure to perform, standing alone, cannot establish fraudulent intent, slight circumstantial evidence of fraud, when considered with the breach of a promise to perform, is sufficient to support a finding of fraudulent intent."). McCrary allegedly made promises in his capacity as CEO of RRT while acting within the scope of his authority there. 70 922 S.W.2d at 953. See NationsBank, These allegations demonstrate the "who, what, when, where, and how" of the alleged fraud, and Maner has satisfied the heightened pleading requirement of Rule 9(b). Fort James Corp., 470 F.3d at 1174. See Carroll v. Accordingly, RRT's motion to dismiss the fraud claim against it will be denied. 2. Maner's Conspiracy Claim Subject to Dismissal Against All Defendants is RRT argues that conspiracy is an intentional tort that must be based on an underlying intentional tort, and that "a conspiracy to 69 See Amended Complaint, Docket Entry No. 6, pp. 4-6 70 See id. at 10 ~ 53. -25- ~~ 17-23. breach a contract Texas law. 71 is neither intentional nor actionable" under Maner responds that "the facts that [each defendant] knew of the failure of compensation and that each of the individual defendants deviated from the grant proposal's payments to take the share indicated for plaintiff highly suggest that they conspired to exclude plaintiff from his share of the grant funding." 72 Additionally, RHT, Maner's only financial link to the project, was "rendered defunct," while its officers failed to communicate with Maner regarding his K-1s, and RRT failed to contact Maner regarding the grant proposal's success. 73 Maner argues that although a corporation may not conspire with itself, these alleged facts show that the "individual defendants conspired among themselves to deprive plaintiff of his justly earned moneys and then divided the monies amongst themselves" and "used the limited partnership to further their individual goals." 74 Amended Complaint, which states: Maner cites paragraph 4 7 of the "Plaintiff relied upon these representations, which were material to Plaintiff in expending his 71 See RRT's Motion for Partial Dismissal, Docket Entry No. 10, p. 4 (citing Arthur W. Tifford, PA v. Tandem Energy Corp., 562 F.3d 699, 709-10 (5th Cir. 2009); Firestone Steel Products Co. v. Barajas, 927 S.W.2d 608, 614 (Tex. 1996); and Leasehold Expense Recovery, Inc. v. Mothers Work, Inc., 331 F.3d 452, 463 (5th Cir. 2003)) . 72 See Response to RRT's Motion for Partial Dismissal, Docket Entry No. 12, p. 6 ~ 10. 73 See id. 74Id. -26- time, toil, and effort, without compensation, on the business of RRT. "75 "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Iqbal, 129 S. Ct. at 1949 1964-65) . (quoting Twombly, 127 S. Ct. at Under the heading "Count 3: Conspiracy," the Amended Complaint states: 34. The Defendant(s) were members of a combination of two or more people, with, upon information and belief, the specific intent and/or "meeting of the minds" to accomplish monetary gain through unlawfully breaching the Contract, and/or committing fraud as herein described. 35. The Defendant(s) committed the overt acts of breach of contract and/ or fraud in perpetuating their objective, and these wrongful acts have caused injury to the Plaintiff for which Plaintiff herein sues. The elements of conspiracy in Texas are: persons; (2) an end to be accomplished; the end or course of action; "' (1) two or more (3) meeting of the minds on (4) one or more overt, unlawful acts; and (5) proximately resulting in injury.' A defendant's liability is derivative of an underlying tort; without independent tortious conduct, there is no actionable civil conspiracy claim." Arthur W. Tifford, PA v. Tandem Energy Corp., 562 F.3d 699, 709-10 (5th Cir. 2009) (citing Miller v. Raytheon Aircraft Co., 229 S.W.3d 358, 381 (Tex. App.-Houston [1st Dist.] 2007, no pet.)) (internal citation omitted); Van Duzer v. U.S. Bank Nat. Ass'n, 995 F. Supp. 2d 673, 693 (S.D. Tex. 2014). "Thus, conspiracy to breach a contract is 75Id. -27- not actionable under Texas law." Monclat Hospitality, LLC v. Landmark American Ins. Co., No. 4:15-cv-632-A, 2015 WL 5920757, at *5 (N.D. Tex. Oct. 8, 2015) (citing Grizzle v. Texas Commerce Bank, 38 S.W.3d 265, 285 (Tex. App.-Dallas 2001), rev'd on other grounds, Maner cannot rely on the breach of 9 6 S . W. 3d 2 4 0 ( Tex . 2 0 0 3 ) ) . contract claim to support a conspiracy claim. Even with fraud as alleged underlying intentionally tortious conduct for Texas itself, law, the conspiracy, has held that "[t] he Fifth Circuit, 'a corporation cannot no matter how many of wrongful action.'" Id. its H-112973, 2014), aff'd 2014 WL 4649885, sub conspire nom., United 611 F. Ligai v. at *14-*15 States App'x 219 Tex. rel. Ligai (5th Cir. 2015). Technologies, Inc., actions of a corporate agent on behalf of deemed the corporation's acts." 331 ETS-Lindgren Inc., (S.D. ex with participated in the (quoting Leasehold Expense Recovery, F.3d at 463); United States ex rel. No. agents interpreting Sept. 16, v. ESCO "[T]he the corporation are Orthoflex. Inc. v. ThermoTek, Inc., Nos. 3:11-CV-0870-D, 3:10-CV-2618-D, 2012 WL 2864510, at *6 (N.D. Tex. July 12, 2012) 793, 795 (Tex. 1995)). (quoting Holloway v. Skinner, 898 S.W.2d "[T] herefore [,] employees and agents cannot conspire with each other unless they act outside the scope of their employment or for their own personal benefit." Mortgage III Sub, July 8, 2013) I, LLC, See Mathis v. DCR 952 F. Supp. 2d 828, 836-37 (W.D. Tex. (quoting Crouch v. Trinque, 262 S.W.3d 417, 427 (Tex. App.-Eastland 2008, no pet.)). -28- Maner has not alleged any facts that would plausibly lead to the conclusion that the individual defendants were acting outside the scope of their agency for RRT when they submitted the grant proposal. The Amended Complaint does not provide any facts as to how RRT participated Recovery, 331 in a F. 3d at conspiracy. 463 (finding conspired with its counsel, See LER' s Graham Miles, Leasehold claim that Expense "Mothers to enter secret 'side deals' with its landlords in an attempt to avoid compensating LER under the Contract" failed because "LER has not alleged that Miles has any independent interest that would make it possible for him, under Texas law, to conspire with Mothers"); Mastronardi v. Wells Fargo Bank, N.A., No. 4:15-cv-452-A, (N.D. Tex. Sept. 17, 2015). allegation of allegations," legal and at *6-*7 This conspiracy claim "is a bare-bones conclusions does 2015 WL 5472924, not meet without the supporting pleading factual and specificity requirements of the Federal Rules of Civil Procedure. See DiNoto v. USAA Cas. Ins. Co., No. H-13-2877, 2014 WL 4923975, at *11 (S.D. Tex. Sept. 30, 2014); 2015 WL 5794021, Amended Complaint King v. at *11-*12 fails Jarrett, (W.D. to state a Tex. No. A-15-cv-00491-LY-ML, October 1, 2015). The conspiracy claim for which relief can be granted against any defendant. Accordingly, RRT's motion to dismiss and McCrary and Fink's motion to dismiss will be granted as to the conspiracy claim. -29- IV. Conclusion and Order For the reasons stated above, McCrary will not jurisdiction under be Fed. dismissed R. Civ. the claims against Fink and for P. lack of 12 (b) (1). subject-matter The breach of contract, quantum meruit, and fraud claims will be dismissed as to Fink but not as to McCrary. The copyright infringement claim will not be dismissed against either Fink or McCrary. The conspiracy claim against all defendants will be dismissed pursuant to Fed. R. Civ. P. 12(b) (6). Additionally, RRT will have fourteen days from the date of this Memorandum Opinion and Order to file an answer. Accordingly, Defendants, McCrary and Fink's Motion to Dismiss Plaintiff's First Amended Complaint (Docket Entry No. 9) is GRANTED in PART and DENIED in PART, Technologies, and Defendant Reproductive Research L.P.'s Motion for Partial Dismissal of Plaintiff's First Amended Complaint and Motion for Additional Time to File an Answer (Docket Entry No. 10) is GRANTED in PART and DENIED in PART. SIGNED at Houston, Texas, on this 4th day of November, 2015. SIM LAKE UNITED STATES DISTRICT JUDGE -30-

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