Hugh v. E Tech Holdings, Inc.

Filing 12

MEMORANDUM OPINION. Signed by Judge Alexander Williams, Jr on 8/26/2013. (kns, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
SOUTHERN DIVISION

HYESUN HUGH,
Plaintiff,
v.

Civil Action No. 8:13-cv-01197-AW

E TECH HOLDINGS, INC.,
Defendant.

MEMORANDUM OPINION
Pending before the Court is Defendant’s Motion to Dismiss. The Court has reviewed the
record and deems a hearing unnecessary. For the following reasons, the Court DENIES
Defendant’s Motion to Dismiss.
I.

FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Hyesun Hugh (“Plaintiff”) is a resident of Virginia. Defendant E Tech Holdings,

Inc. (“Defendant”) is a Maryland corporation. Plaintiff alleges that she was a 51% owner of the
Maryland corporation Isat, Inc. (“Iast”). Isat also used the trade name SM Technology. Yong
Hugh (Mr. Hugh) allegedly owned the remaining 49% of Isat. Plaintiff and Mr. Hugh are
married but have separated.
Plaintiff alleges that, unbeknown to her, Isat was dissolved in August 2011. Although it is
not fully clear, the Articles of Dissolution that the Complaint incorporates indicate that Mr. Hugh
and Jong H. Woo filed them. See Doc. No. 1-6 at 3–4. The Articles of Dissolution state that Mr.

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Hugh was President, Treasurer, and Secretary of Isat and that Jong Woo was a director. It is
unclear whether Plaintiff alleges that Mr. Hugh and Jong Woo are the same person.
In June 2011, Defendant filed Articles of Incorporation. Doc. No. 1-4. The Articles of
Incorporation indicate that an individual named Jee Yourn Hugh filed them. It is unclear whether
Jee Yourn Hugh is Mr. Hugh. Plaintiff alleges that Defendant is using Isat’s trade name SM
Technology, telephone number, and website. Plaintiff further alleges that Defendant’s business
activities are identical to Isat’s and that Defendant is serving the former clients of Isat. As a
result of this conduct, Plaintiff alleges that Defendant divested her of her 51% ownership of Isat
and misappropriated its assets.
Plaintiff filed a Complaint on April 23, 2013. Doc. No. 1. Based on the foregoing
allegations, Plaintiff asserts claims for tortious interference with contract, unjust enrichment, and
“distributions to stockholders in voluntary dissolution and accounting.” Doc. No. 1 at 4. On July
16, 2013, Defendant filed a 3-page Motion to Dismiss (Doc. No. 10), arguing that Plaintiff has
failed to state facially plausible claims. Plaintiff responded on July 29, 2013. Doc. No. 11.
Defendant’s reply was due by August 15, 2013. Defendant has not replied.
II.

STANDARD OF REVIEW
The purpose of a 12(b)(6) motion to dismiss is to test the sufficiency of the plaintiff’s

complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). In two recent
cases, the U.S. Supreme Court has clarified the standard applicable to Rule 12(b)(6) motions.
Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).
These cases make clear that Rule 8 “requires a ‘showing,’ rather than a blanket assertion, of
entitlement to relief.” Twombly, 550 U.S. at 556 n.3 (quoting Fed. R. Civ. P. 8(a)(2)). This

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showing must consist of at least “enough facts to state a claim to relief that is plausible on its
face.” Id. at 570.
In deciding a motion to dismiss, the court should first review the complaint to determine
which pleadings are entitled to the assumption of truth. See Iqbal, 129 S. Ct. at 1949–50. “When
there are well-pleaded factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief.” Id. at 1950. In so doing,
the court must construe all factual allegations in the light most favorable to the plaintiff. See
Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999). The Court
need not, however, accept unsupported legal allegations, Revene v. Charles County
Commissioners, 882 F.2d 870, 873 (4th Cir. 1989), legal conclusions couched as factual
allegations, Papasan v. Allain, 478 U.S. 265, 286 (1986), or conclusory factual allegations
devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847
(4th Cir. 1979).
III.

ANALYSIS

A.

Tortious Interference with Contract
“The tort of intentional interference with contract is well established in Maryland.”

Macklin v. Robert Logan Assocs., 639 A.2d 112, 116–17 (Md. 1994) (collecting cases). The tort
has two branches. “The tort . . . is committed when [1] a third party’s intentional interference
with another in his or her business or occupation induces a breach of an existing contract or, [2]
absent an existing contract, maliciously or wrongfully infringes upon an economic relationship.”
Id. (citations omitted). The first branch of the tort has five elements: “(1) existence of a contract
between plaintiff and a third party; (2) defendant’s knowledge of that contract; (3) defendant’s
intentional interference with that contract; (4) breach of that contract by the third party; and (5)

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resulting damages to the plaintiff.” Fowler v. Printers II, Inc., 598 A.2d 794, 802 (Md. Ct. Spec.
App. 1991) (citations omitted). By contrast, to establish tortious interference with prospective
contractual relations, one must plead and prove the following elements: “(1) intentional and
willful acts; (2) calculated to cause damage to the plaintiffs in their lawful business; (3) done
with the unlawful purpose to cause such damage and loss, without right or justifiable cause on
the part of the defendants (which constitutes malice); and (4) actual damage and loss resulting.”
Kaser v. Fin. Prot. Mktg., Inc., 831 A.2d 49, 53 (Md. 2003) (citation and internal quotation
marks omitted).
In this case, Plaintiff has pleaded a facially plausible claim for tortious interference with
contract. Although Plaintiff does not clearly allege that Defendant induced the breach of existing
contracts, Plaintiff has adequately alleged the second branch of the tort, i.e., that Defendant
tortiously interfered with prospective contractual relations. The crux of Plaintiff’s allegations is
that Defendant, in violation of her legitimate business expectations, intentionally and willfully
schemed to divest her of her interest in Isat and that she suffered considerable economic harm as
a result. Accordingly, construing Plaintiff’s allegations in the most favorable light, Plaintiff has
stated a cognizable claim for tortious interference with prospective contractual relations.1
B.

Unjust Enrichment
The elements of unjust enrichment are as follows: “[1] A benefit conferred upon the

defendant by the plaintiff; [2] An appreciation or knowledge by the defendant of the benefit; and
[3] The acceptance or retention by the defendant of the benefit under such circumstances as to
make it inequitable for the defendant to retain the benefit without the payment of its value.” Hill
v. Cross Country Settlements, LLC, 936 A.2d 343, 351 (Md. 2007) (citation and internal

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This ruling does not prejudice the right of Plaintiff to pursue her tortious interference with contract
claim on the theory that Defendant interfered with, and/or induced the breach of, existing contracts if
discovery provides a factual basis for this claim.

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quotation marks omitted). “Unjust enrichment is a claim . . . that may not be reduced neatly to a
golden rule.” Id. (citation and internal quotation marks omitted). “A successful unjust enrichment
claim serves to deprive the defendant of benefits that in equity and good conscience he ought not
to keep . . . .” Id. at 352 (citation and internal quotation marks omitted).
In this case, Plaintiff has stated a facially plausible unjust enrichment claim. Again, the
essence of Plaintiff’s allegations is that Defendant intentionally and willfully schemed to divest
her of her majority interest in Isat. Construing Plaintiff’s allegations favorably, one can plausibly
infer that Defendant has misappropriated Plaintiff’s benefits and that in equity and good
conscience it should not keep them. Accordingly, Plaintiff has stated a cognizable unjust
enrichment claim.
C.

Distributions to Stockholders/Accounting
Defendant does not meaningfully argue that Plaintiff has failed to state a cognizable

distributions-to-shareholders claim under section 3-412 of the Corporations and Associations
Article of the Maryland Code. See generally Md. Code Ann., Corps. & Ass’ns § 3–412(e)(1).
Indeed, in challenging this claim, Defendant relies on the wrong section of the Maryland Code.
See Doc. No. 10-1 at 2 (citing Md. Code Ann., Cts. & Jud. Proc. § 3-412). Be that as it may, the
Court has carefully reviewed the Complaint and incorporated documents and concludes that
Plaintiff has stated a cognizable distribution-to-stockholders claim.2 The Court also concludes
that Plaintiff has stated a facially plausible accounting claim, whether as a standalone claim or to
remedy the allegedly improper distribution of Plaintiff’s shares in Isat. Compare Orteck Int’l Inc.
v. Transpacific Tire Wheel, Inc., 704 F. Supp. 2d 499, 521 (D. Md. 2010) (“An accounting is . . .
a remedy, not a separate cause of action, and not available absent some independent cause of

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The question whether Plaintiff could state a claim under some other provision of the Corporations and
Associations Article is not before the Court.

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action.”), with P.V. Props., Inc. v. Rock Creek Village Assocs. Ltd. P’ship, 549 A.2d 403, 409
(Md. Ct. Spec. App. 1988) (citation omitted) (“The general rule is that a suit in equity for an
accounting may be maintained when the remedies at law are inadequate.”).3
IV.

CONCLUSION
For the foregoing reasons, the Court DENIES Defendant’s Motion to Dismiss. A

separate Order follows. The Court will issue a Scheduling Order.
August 26, 2013
Date

/s/
Alexander Williams, Jr.
United States District Judge

3
Although Plaintiff has named only E Tech Holdings, Inc. as Defendant, it would appear that Plaintiff
predicates her claims on the conduct of Mr. Hugh, Jong Woo, and/or Jee Yourn Hugh as well. The
question whether Plaintiff would ultimately be able to prevail on one or more of her claims without
joining one of more of these individuals is not before the Court.

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