Joint Technology Inc v. Weaver et al
Filing
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ORDER granting in part and denying in part 30 third-party defendant Jim Patton's Motion to Dismiss Third-Party Action (as more fully set out in the Order). Finally, the Court finds Weaver's request for leave to amend and Patton's motion to dismiss Weaver's claim for accounting are MOOT. Signed by Honorable Vicki Miles-LaGrange on 12/29/2011. (njr)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
JOINT TECHNOLOGY, INC. d/b/a
REVERT SYSTEMS, an Oklahoma
Corporation,
Plaintiff-Counter Defendant,
v.
GARY KENT WEAVER, JR.,
individually,
Defendant-Counter Claimant.
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Case No. CIV-11-846-M
ORDER
Before the Court is third-party defendant Jim Patton’s (“Patton”) Motion to Dismiss ThirdParty Action, filed October 31, 2011. On November 21, 2011, third-party plaintiff Gary Kent
Weaver, Jr. (“Weaver”) filed his response. Patton did not file a reply. Based upon the parties’
submissions, the Court makes its determination.
I.
Introduction
Joint Technology, Inc. (“Joint”) d/b/a Revert Systems is a distributor of durable medical
equipment and related products. Patton is the president and a shareholder of Joint.
In 2008, Weaver entered into an agreement to sell and deliver medical braces and
compression equipment for Joint. Weaver received orders for Joint through doctor referrals,
processed the order for Joint, and delivered devices to patients. Joint paid Weaver commission for
his sales.
In August 2009, Weaver formed the sole proprietorship of Weaver Family Orthotics. Weaver
processed orders for Joint through Weaver Family Orthotics. Joint paid commission directly to
Weaver Family Orthotics.
In March 2010, Weaver Family Orthotics was incorporated as Weaver Medical Group, Inc.
(“Weaver Medical”). Weaver Medical assumed the sales obligation of Weaver’s contract with Joint.
Joint made commission payments directly to Weaver Medical; after March 2010, Joint did not make
commission payments individually to Weaver.
Weaver alleges that, excluding payments for rent, Joint did not reimburse Weaver, Weaver
Family Orthotics, or Weaver Medical for expenses incurred due to the performance of obligations
for Joint. Weaver Medical hired independent contractors, at its own cost to obtain, process, and
deliver orders. Weaver further alleges that the independent contractors did not contract with Joint
directly.
Weaver Medical operated out of nine facilities in Tennessee that were leased by Patton or
Joint. Weaver, for Weaver Medical, prepared the facilities for operation and purchased furnishings,
computer equipment, and office supplies for the nine locations without reimbursement from Joint.
Weaver Medical paid the monthly rent on the nine facilities in Tennessee. Joint reimbursed
Weaver Medical for half of the rent through February 2011. In March 2011, Joint began to pay the
entire rent for the facilities.
On May 20, 2011, Weaver terminated his relationship with Joint. Patton and Joint refused
to allow Weaver access to the facilities and threatened criminal and civil actions if Weaver entered
the facilities for any reason. Weaver alleges that he has attempted to arrange to retrieve the property,
but Patton and Joint have refused to provide Weaver access.
According to Weaver, on or about May 23, 2011, Patton began contacting independent
contractors that contracted with Weaver Medical. Weaver alleges that Patton informed the
independent contractors that he intended to file suit against Weaver to enjoin Weaver from
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competing with Joint. Additionally, Patton threatened to name the independent contractors
individually in the suit if they continued to work for Weaver or Weaver Medical.1
On or about the same date, Patton disclosed Weaver’s confidential financial and tax
information to third parties. According to Weaver, Patton disclosed Weaver’s Internal Revenue
Service Form 1099s to third parties.
In or about September 2011, Patton told suppliers for Weaver Medical that Weaver was
violating his contract by using the suppliers. Further, Patten threatened the suppliers for continuing
to do business with Weaver and Weaver Medical.
In October 2011, Joint withheld approximately $5,000.00 from its final commission payment
without providing an accounting. On July 26, 2011, Joint filed its Complaint. On October 18, 2011,
Weaver filed his Third-Party Claims.
II.
Standard
Regarding the standard for determining whether to dismiss a claim pursuant to Rule 12(b)(6),
the United States Supreme Court has held:
To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is
plausible on its face. A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged. The
plausibility standard is not akin to a “probability requirement,” but it
asks for more than a sheer possibility that a defendant has acted
unlawfully. Where a complaint pleads facts that are merely consistent
with a defendant’s liability, it stops short of the line between
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Weaver’s third-party action states that Patton “threatened to name the independent
contractors individually if they continued to do work for [Weaver] or [Weaver Medical].
Amended Answer, Counterclaims, and Third-Party Claims (“Third-Party Claims”) [docket no.
25], at ¶ 54. The Court interprets this as an allegation that Patton threatened to name the
independent contractors in criminal and civil actions against Weaver.
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possibility and plausibility of entitlement to relief.
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal quotations and citations omitted). Further,
“where the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged - but it has not shown - that the pleader is entitled to relief.”
Id. (internal quotations and citations omitted). Additionally, “[a] pleading that offers labels and
conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a
complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement.” Id. at 1949
(internal quotations and citations omitted).
III.
Discussion
A.
Tortious Interference with Business Relationship
Patton moves the Court to dismiss Weaver’s tortious interference with business relationship
claim because Weaver did not have a contractual relationship with his suppliers and because Patton’s
announcement of an intention to sue was not malicious or wrongful. Weaver contends that Patton
interfered with his existing and prospective contractual relationship with suppliers.
“Oklahoma recognizes a tortious interference claim with a contractual or business
relationship if the plaintiff can prove (1) the interference was with an existing contractual or business
right; (2) such interference was malicious and wrongful; (3) the interference was neither justified,
privileged nor excusable; and (4) the interference proximately caused damage.” Wilspec Tech., Inc.
v. DunAn Holding Grp., Co., Ltd., 204 P.3d 69, 74 (Okla. 2009) (citing Mac Adjustment, Inc. v.
Prop. Loss Research Bureau, 595 P.2d 427, 428 (Okla. 1979)).
In the case at bar, the Court finds that Weaver does not allege sufficient facts to establish a
cause of action for tortious interference with business relationship in regards to his relationship with
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his suppliers. Specifically, Weaver does not allege that he had a contractual or business right with
his suppliers. Rather, both parties acknowledge that the suppliers were free to conduct business with
whomever the suppliers wanted. Patton’s Motion to Dismiss Third Party Action [docket no. 30],
at p. 3;2 Weaver’s Response to Patton’s Motion to Dismiss Third Party Action [docket no. 33], at
p. 5. Thus, Weaver does not satisfy the first element of a claim for tortious interference with
business relationship.
Additionally, Weaver alleges that Patton interfered with the business relationship of Weaver
and various employees and customers to Weavers detriment. However, Weaver only alleges that
“Patton’s tactics successfully scared at least one supplier . . . into terminating its business
relationship with Weaver.” Third-Party Claims, at ¶ 56. Weaver is silent as to any damage to his
relationship with his employees and customers. Thus, the Court finds Weaver’s claim for tortious
interference with business relationship in regards to his employees and customers is naked assertions
devoid of further factual enhancement. Ashcroft, 129 S. Ct. at 1949. More specifically, Weaver’s
third-party claim does not contain sufficient facts to establish that the fourth element – the
interference proximately caused damage – was satisfied in regards to his relationships with his
employees and customers.
Therefore, the Court dismisses Weaver’s claim for tortious interference with business
relationship.
B.
Fraud
The Supreme Court of Oklahoma has stated that:
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Patton’s Motion to Dismiss Third party Action incorporates the arguments made in
Joint’s Motion to Dismiss Counterclaims [docket no. 28], at p. 3.
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[T]he elements for actionable fraud [require]: 1) a false material
misrepresentation, 2) made as a positive assertion which is either
known to be false or is made recklessly without knowledge of the
truth, 3) with the intention that it be acted upon, 4) which is relied on
by the other party to his (or her) own detriment. Fraud is never
presumed and each of its elements must be proved by clear and
convincing evidence.
Bowman v. Presley, 212 P.3d 1210, 1217-18 (Okla. 2009).
Weaver does not allege that he relied on any misrepresentation by Patton to his detriment.
The gravamen of Weaver’s claim is that Patton made misrepresentations regarding Weaver to
Weaver’s employees, suppliers, and customers. Thus, Weaver fails to satisfy the fourth element of
fraud as he did not rely on Patton’s misrepresentation.
Therefore, the Court dismisses Weaver’s claim for fraud.3
C.
Defamation
Patton moves the Court to dismiss Weaver’s defamation claim on the grounds that Weaver
did not identify the alleged defamatory statement and that the First Amendment provides protection
for its statements. Weaver contends that Patton’s statements are not afforded a litigation privilege
protection under the First Amendment.
“In order to recover for defamation, a private figure must prove (1) a false and defamatory
statement, (2) an unprivileged publication to a third party, (3) fault amounting at least to negligence
on the part of the publisher; and (4) either the actionability of the statement irrespective of special
damage, or the existence of special damage caused by the publication.” Trice v. Burress, 137 P.3d
1253, 1257 (Okla. Civ. App. 2006) (internal quotation and citation omitted).
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In his response, Weaver asserts that he made a valid claim for fraud under the Lanham
Act. The Court finds this argument inapposite as Weaver made no mention of fraud under the
Lanham Act in his third-party claim.
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“The issue of whether a communication is privileged is a question of law to be determined
by the court. The litigation privilege . . . accords attorneys, parties, jurors and witnesses immunity
for comments or writings made during the course of or preliminary to judicial or quasi-judicial
proceedings. It applies regardless of whether the communications are true or false.” Springer v.
Richardson Law Firm, 239 P.3d 473, 475 (Okla. Civ. App. 2010) (internal quotations and citations
omitted) (emphasis in original).
Here, the Court finds that Weaver alleges sufficient facts to establish a plausible cause of
action for defamation. First, Weaver alleges that Patton made false and defamatory statements when
Patton told suppliers that Weaver was violating his contract by using the suppliers. Second, while
Patton’s statements mentioned the possibility of legal action, these statements were not privileged
publications because they were not made during the course of or preliminary to a judicial or quasi
judicial proceeding. Third, Patton was at least negligent because he contacted the suppliers and told
them the statements. Finally, Weaver alleges that Patton’s statements caused damages because at
least one supplier terminated its business relationship with Weaver and Weaver Medical.
Therefore, the Court denies Patton’s motion to dismiss Weaver’s claim for defamation.
D.
Injunctive Relief
Patton moves to dismiss Weaver’s request for injunctive relief on the grounds that Weaver’s
financial and tax information is not confidential. Weaver contends that Patton should be enjoined
because Weaver has a right to operate his business without interference from Patton and because
disclosure of Weaver’s financial and tax information will cause irreparable harm.
“A party requesting a permanent injunction bears the burden of showing: (1) actual success
on the merits; (2) irreparable harm unless the injunction is issued; (3) the threatened injury outweighs
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the harm that the injunction may cause the opposing party; and (4) the injunction, if issued, will not
adversely affect the public interest.” Fisher v. Okla. Health Care Auth., 335 F.3d 1175, 1180 (10th
Cir. 2003).
Pursuant to 26 U.S.C. § 7431(a)(2), “[i]f any person who is not an officer or employee of the
United States knowingly, or by reason of negligence, inspects or discloses any return or return
information with respect to a taxpayer in violation of any provision of section 6103 or in violation
of section 6104(c), such taxpayer may bring a civil action for damages against such person in a
district court of the United States.”4
In the case at bar, the Court finds that Weaver has not set forth sufficient allegations to
establish actual success on the merits to enjoin Patton from interfering with Weaver’s business. In
light of the Court’s decision to dismiss Weaver’s claim for tortious interference with business
relationship in Part III.A, Weaver cannot show he would have actual success on the merits for
Patton’s alleged interference with his business. Thus, the Court finds that it should not grant Weaver
injunctive relief to enjoin Joint from interfering with Weaver’s business.
However, the Court finds that Weaver has alleged sufficient facts to establish a request for
injunctive relief in regards to Patton’s disclosure of tax information. First, Weaver can show actual
success on the merits because, assuming Weaver’s allegations as true, a jury could find Joint and
Patton were in violation of 26 U.S.C. § 7431(a)(2) when they disclosed Weaver’s Internal Revenue
Service Form 1099s to third parties. Second, Weaver alleges that he will suffer irreparable harm
unless the injunction is issued because Patton will continue to disclose Weaver’s tax information.
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As a general rule proscribed under 26 U.S.C. § 6103(a)(3), return information is
confidential and no person who has or had access to return information should disclose it.
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Third, the threat of further disclosing Weaver’s tax information outweighs any harm of an injunction
to Patton because Patton would not suffer any foreseeable harm in not disclosing Weaver’s tax
information. Finally, enjoining Patton to refrain from disclosing Weaver’s tax information does not
adversely affect the public interest as the requested injunction comports with the protections
provided pursuant to 26 U.S.C. § 7431(a)(2).
Therefore, the Court grants in part and denies in part Patton’s motion to dismiss Weaver’s
request for injunctive relief. Specifically, the Court grants Patton’s motion to dismiss in regards to
Weaver’s request for injunctive relief pertaining to interference with his business, and the Court
denies Patton’s motion to dismiss in regards to Weaver’s request for injunctive relief pertaining to
disclosure of his tax information.
E.
Unjust Enrichment
Patton moves to dismiss Weaver’s claim for unjust enrichment on the grounds that Weaver
may have a cause of action for tortious interference with business relationship. Weaver contends that
his claim for tortious interference with business relationship does not preclude him from bringing
a claim for unjust enrichment.
Unjust enrichment is a condition which results from the failure of a
party to make restitution in circumstances where it is inequitable; i.e.
the party has money in its hands that, in equity and good conscience,
it should not be allowed to retain. Where the plaintiff has an
adequate remedy at law, the court will not ordinarily exercise its
equitable jurisdiction to grant relief for unjust enrichment.
Harvell v. Goodyear Tire and Rubber Co., 164 P.3d 1028, 1035 (Okla. 2006). However, a plaintiff
may make an alternative claim for unjust enrichment and a claim for an available tort claim as long
as the plaintiff is not given double recovery. N.C. Corff P’ship, Ltd. v. OXY USA, Inc., 929 P.2d 228,
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298 (Okla. Civ. App. 1996). Moreover, “[a] party may state as many separate claims or defenses as
it has, regardless of inconsistency.” Fed. R. Civ. P. 8(d)(3).
The Court finds that Weaver’s claim for unjust enrichment is an alternative theory of
recovery for Weaver’s tortious interference with business relationship claim. As such, Weaver can
allege both a claim for unjust enrichment and tortious interference with business relationship as long
as Weaver does not receive double recovery. Furthermore, in light of the Court’s decision to dismiss
Weaver’s claim for tortious interference with business relationship in Part III.A, Weaver is not left
with an adequate remedy at law to recover his damages for the alleged interference.
Therefore, the Court denies Patton’s motion to dismiss Weaver’s claim for unjust enrichment.
F.
Accounting
Patton moves to dismiss Weaver’s claim for accounting against him. However, Weaver has
not alleged such a claim against Patton. Third-Party Claims, passim; Weaver’s Response to Patton’s
Motion to Dismiss Third Party Action [docket no. 33], at p. 15. Thus, the Court finds Patton’s
motion to dismiss Weaver’s claim is moot.
G.
Conversion and Replevin
Patton asserts that Weaver’s claim for conversion and replevin against Patton should not be
joined under Federal Rule of Civil Procedure 20(a) because Patton’s claims are unrelated to Joint’s
Complaint. Weaver contends that the claim for conversion and replevin should be joined because
Patton is a necessary party in this matter.
The Supreme Court has noted that Rule 20 provides “liberal joinder.” See Snyder v. Harris,
394 U.S. 332, 340 (1969). Pursuant to Rule 20(a)(2), a person may be joined in an action as a
defendant if “any right to relief is asserted against them jointly, severally, or in the alternative with
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respect to arising out of the same transaction, occurrence, or series of transactions or occurrences”
and “any question of law or fact common to all defendants will arise in the action.”
Furthermore, “Rule 19 is available if an action should not proceed without a particular person
as a defendant . . . .” Hefley v. Textron, Inc., 713 F.2d 1487, 1499 (10th Cir. 1983). Rule 19(a)
requires a court to order joinder of a party if:
“(1) in the person’s absence complete relief cannot be accorded
among those already parties, or (2) the person claims an interest
relating to the subject of the action and is so situated that the
disposition of the action in the person’s absence may (i) as a practical
matter impair or impede the person’s ability to protect that interest or
(ii) leave any of the persons already parties subject to a substantial
risk of incurring double, multiple, or otherwise inconsistent
obligations by reason of the claimed interest.”
Orff v. United States, 545 U.S. 596, 602 (2005) (citing Fed. R. Civ. P. 19(a)).
In the case at bar, the Court finds Weaver’s claim for conversion and replevin against Patton
should be joined in this matter. The Court finds that Patton’s absence would cause Weaver to be
denied of complete relief because Weaver has alleged that Patton and/or Joint have possession of
Patton’s personal property. Third-Party Claim, at ¶ 86. Additionally, because the crux of Weaver’s
claims against Joint involve Patton’s actions done on behalf of Joint, Weaver’s conversion and
replevin allegations against Patton involve the same transactions or occurrences and share common
questions of law and facts as Weaver’s claims against Joint.
Therefore, the Court denies Patton’s motion to dismiss Weaver’s claim for conversion and
replevin.
H.
Leave to Amend
In Weaver’s response, he requests, in the alternative, leave to amend his third-party claims.
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On December 1, 2011, Weaver filed a separate Motion in the Alternative for Leave to File a Second
Amended Answer, Counterclaims, and Third-Party Claims [docket no. 34]. In light of the Court’s
Order denying leave to amend, entered this same date, the Court finds Weaver’s request for leave
to amend is moot.
IV.
Conclusion
Accordingly, the Court GRANTS IN PART and DENIES IN PART Patton’s Motion to
Dismiss Third-Party Action [docket no. 30]. Specifically, the Court GRANTS Patton’s Motion to
Dismiss Third-Party Action regarding the following claims:
(1)
Tortious Interference with Business Relations;
(2)
Fraud; and
(3)
Injunctive Relief from Interference with Business.
The Court DENIES Patton’s Motion to Dismiss Third-Party Action regarding the following claims:
(1)
Defamation;
(2)
Injunctive Relief from Disclosure of Tax Information;
(3)
Unjust Enrichment; and
(4)
Conversion and Replevin.
Finally, the Court finds Weaver’s request for leave to amend and Patton’s motion to dismiss
Weaver’s claim for accounting are MOOT.
IT IS SO ORDERED this 29th day of December, 2011.
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