JACKSON HEWITT INC. v. BARNES ENTERPRISES, INC. et al

Filing 306

OPINION. Signed by Judge Dennis M. Cavanaugh on 4/25/2012. (nr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

JACKSON HEWITT, INC.
Plaintiff,

Hon. Dennis NI. Cavanaugh

OPINION

v.
BARNES ENTERPRISES, et al;

Consolidated Case No. l0-cv-05 108 (DMC)
(JAD)

Defendants

JACKSON HEWITT, INC.
V.

KATHRYNE U WARD,
Defendant

DENNIS M. CAVANAUGH, U.S.D.J.:

This matter comes before the Court upon the Motion of Plaintiff Jackson Hewitt, Inc.
(“Plaintiff’) to Dismiss the Counterclaims of Defendant National Tax Network, LLC C’NTN”), ECF
No. 235.

Pursuant to FED. R. Civ. P. 78, no oral argument was heard. After reviewing the

submissions of the parties, and based upon the following, Plaintiffs Motion is granted.

L

BACKGROUND
Plaintiff is a Virginia corporation with its principal place of business located in Parsippanv.

New Jersey. Defendants related to this Motion are Kathryne L. Ward (“Ward”), a citizen ofArizona.
and NTN. Ward signed as a guarantor for National Tax on several franchise agreements to operate
Jackson Hewitt tax preparation businesses in Arizona beginning in 2004. The franchise agreements
gave NTN the right to operate tax return businesses using Plaintiffs trade names, trademarks, service
marks, and logos. NTN also received the right to use Plaintiffs proprietary business methods and
software. On July 23, 2010, Plaintiff terminated the franchise agreements by letter to NTN and
Ward.
During an August 30, 2011 status conference, Magistrate Judge Joseph A. Dickson ordered
Defendants to answer the Complaint on or before September 8, 2011, to serve initial disclosures on
Plaintiff on or before September 15, 2011, and to respond to Plaintiff’s interrogatories and requests
for production on or before September 15, 2011. ECF No. 222, 223. On September 6, 2011,
Magistrate Judge Dickson entered a written Order confirming this schedule (the “September 6
Order”). ECF No. 222, 223.
NTN filed
Counterclaims,

its Answer on

September 8, 2011. ECF No. 227. The Answer asserts six

including allegations of:

misrepresentation;

(2) unfair

competition

and

(1) fraudulent inducement and! or negligent
tortious

interference with contract; (3) detrimental

reliance; (4) fraud, intentional misrepresentation, and negligent misrepresentation; (5) declaratory

judgment; and (6) breach of the implied covenant of good faith and fair dealing. Answer ¶ 80-160.
On September 29, 2011, Plaintiff filed the present Motion, arguing that all Counterclaims should be
dismissed as untimely, that Counterclaims One, Two, Three, Four, and Six fail to state a claim on

which

relief

may be granted, and that Counterclaim Five should be dismissed as this Court has

already adjudicated the issue. NTN did not file Opposition to this Motion.
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IL

LEGAL STANDARD
In deciding a motion under Rule I 2(b)(6), the district court is “required to accept as true all

factual allegations in the complaint and draw all inferences in the facts alleged in the light most
favorable to the [Plaintiffi.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008). “[A]
complaint attacked by a Rule 1 2(b)(6) motion to dismiss does not need detailed factual allegations.”
Bell Ati. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the Plaintiff’s obligation to
provide the grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action will not do.” Id. To survive a motion to
dismiss, the complaint must state a plausible claim. Ashcroft v. Igbal, 129 S. Ct, 1937, 1950 (2009).
Thus, assuming that the factual allegations in the complaint are true, those “[f]actual allegations must
be enough to raise a right to relief above a speculative level.” Bell Atl. Co., 550 U.S. at 555.
The same standard used to dismiss a complaint under Rule 1 2(b)(6) is applied to motions to
dismiss counterclaims. See PPG Industries, Inc. v. Generon IGS. Inc., 760 F.Supp.2d 520, 524 (WD
Pa. 2011). Therefore, this Court must ‘accept as true all of the allegations in the [Defendant’s

counterclaims] and all reasonable inferences that can be drawn therefrom, and view them in the light
most favorable to the non-moving party.” Rocks v. City of Philadelphia, 868 F,2d 644, 645 (3d
Cir.1989).

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The Court notes that as NIN has not responded to Plaintiffs Motion, the matter may be
treated as if it were unopposed. See, e.g., Green v. Essex County Superior Court Clerk, No. 021872 2006 WL 932055, at 1, n.l (D.N.J. April 6, 2006) (“Plaintiff did not respond to
Defendant’s motion; consequently, the Court will review the motion as unopposed.”).

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DISCUSSION
On May 24, 2011, Plaintiff and its subsidiaries filed petitions for Chapter 1 1 reorganization

in the United States Bankruptcy Court for the District of Delaware, Bankruptcy Case No, 11-i 1587.
With these petitions, Plaintiff and its subsidiaries also filed a Joint Plan of Reorganization the
“Plan”). On August 9, 2011, the Bankruptcy Court signed and entered its Findings of Fact,
Conclusions of Law, and Order approving the Plan, which has an effective date of August 16,2011.
Ex. ito Pl.’s Mot, Br.; ECF No, 235-2. Pursuant to the Confirmation Order, Plaintiff is discharged
and released under section 1141 (d)( 1 )(A) of the Bankruptcy Code, and all claims against Plaintiff
arising before the effective date of the Plan are therefore enjoined. Each of NTN’s claims relate to
Plaintiffs conduct in connection with NTN’s acquisition of their franchises, and the eventual
termination of those franchises in July of 2010. These events arose prior to Plaintiffs bankruptcy
petition, and are not subject to any of the exceptions provided under ii U.S.C.

§ 1 14l(d)(1)(A), the

Plan, or the Confirmation Order, Accordingly, Plaintiff has been discharged from any liability on
those claims,
Further, Counterclaim Five of NTN’s Answer seeks a declaratory judgment as to Ward’s
status as a guarantor of the obligations of NTN. This is a familiar argument in this litigation, and
the Court has repeatedly held that Ward is bound by the terms of the guarantee. See, e.g, Jackson
Hewitt, Inc. v. Barnes Enters,, No. 10-5108, 2011 U.S. Dist. LEXIS 41356, at *2.4 (D.N.J. April 15,
2011) (holding Ward bound by terms of Franchise Agreement). Accordingly, Counterclaim Five is
dismissed.

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CONCLUSION
For the foregoing reasons, Plaintiff’s Motion to Dismiss the Counterclaims of NTN is

granted. An appropriate Order accompanies this Opinion.

Dennis M. Cavanaugh. U

Date:
Orig.:
cc:

April2O12
Clerk
All Counsel of Record
Hon. Joseph A. Dickson, U.S.M.J.
File

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