Travelhost Inc v. Modglin et al

Filing 73

Memorandum Opinion and Order: Travelhost's 30 Motion to strike Modglin's counterclaim is DENIED; Travelhost's 31 Motion to dismiss Modglin's counterclaim is GRANTED; Travelhost's 52 Motion to strike Modglin's and RCP's response to its motion for default judgment is GRANTED; and Travelhost's 49 Motion for default judgment on monetary damages against RCP is GRANTED. (Ordered by Senior Judge A. Joe Fish on 2/27/2012) (ctf) Modified 2/27/2012 to insert correct link to Document 52 (motion to strike) (gmg).

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

TRAVELHOST, INC., a corporation,
Plaintiff,
VS.
TRENT MODGLIN, ET AL.,
Defendants.

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CIVIL ACTION NO.
3:11-CV-0456-G

MEMORANDUM OPINION AND ORDER

Before the court are four motions. The plaintiff, Travelhost Inc.
(“Travelhost”), produces magazines, publications, and online products and services
designed to help travelers. First Amended Complaint (“Complaint”) ¶ 7 (docket
entry 5). The defendants, Trent Modglin (“Modglin”) and The Real Chicago
Publishing LLC (“RCP”), entered into a contract with Travelhost regarding a
magazine for travelers in downtown Chicago, Illinois. Id. Modglin is the sole
member of RCP. Id. ¶ 2. For the reasons set forth below, (1) Travelhost’s motion to
strike Modglin’s counterclaim is denied; (2) Travelhost’s motion to dismiss Modglin’s
counterclaim is granted; (3) Travelhost’s motion to strike Modglin’s and RCP’s

response to its motion for default judgment is granted; and (4) Travelhost’s motion
for default judgment on monetary damages against RCP is granted.
I. BACKGROUND
On November 30, 2007, Travelhost and RCP entered into a Distributorship
Agreement and an Optional Associate Publisher Agreement. Complaint ¶ 10. Under
this agreement, RCP would receive 15,000 copies of the downtown Chicago local
edition of the Travelhost magazine. Id. RCP was obligated to use its best efforts to
distribute the publication and to sell advertising within the downtown Chicago. Id.
Under the auspices of the agreement, the defendants solicited local businesses to
advertise in the downtown Chicago magazine. Id. ¶ 13. The defendants also entered
into distributorship agreements with hotels and motels that would place issues of the
magazine in their guest rooms. Id.
Between late 2007 and late 2009, the defendants distributed eight issues of the
magazine. Id. ¶ 14. The defendants received 100% of all of the local advertising
revenues generated from this distribution. Id. However, shortly after the distribution
of the September-November 2009 issue, Travelhost alleges, Modglin began
distributing, and selling advertising space for, a new publication called “The REAL
Chicago.” Id. ¶ 16. Travelhost argues that this publication is a direct competitor
with the Travelhost magazine, and that the defendants are in breach of the noncompete agreement in their contracts. Id. Travelhost also argues that RCP has failed

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to purchase and distribute any other issues of the downtown Chicago magazine, as
required by the contracts. Id. ¶ 20.
On March 4, 2011, Travelhost filed this suit against RCP and Modglin. On
March 10, 2011, Travelhost filed its first amended complaint. Id. at 1. In this
complaint, Travelhost has brought claims for breach of contract, temporary and
permanent injunctive relief, a constructive trust, an accounting, and attorney’s fees.
Id. ¶¶ 23-45. Modglin filed an answer to the suit on September 7, 2011. Defendant’
Original Answer (“Answer”) at 1 (docket entry 17). However, RCP never “filed an
answer and [showed] no indication that it intends to defend the claims in plaintiff’s
first amended complaint.” Order Granting Permanent Injunction by Default
(“Order”) at 1 (docket entry 25). As a result, the court granted Travelhost’s motion
for permanent injunction by default against RCP. Id. at 5-8.
II. ANALYSIS
A. Modglin’s Counterclaim Against Travelhost
On September 28, 2011, Modglin filed an unsigned counterclaim against
Travelhost. Counterclaim by Defendant (“First Counterclaim”) at 1 (docket entry
24). Travelhost has filed both a motion to strike and a motion to dismiss Modglin’s
counterclaim. Travelhost’s Motion to Strike Counter-Plaintiff’s Counterclaim and
Brief in Support (“Motion to Strike Counterclaim”) at 1 (docket entry 30);
Travelhost’s Motion to Dismiss Counter-Plaintiff’s Claims Pursuant to Rule 12(b)(6)

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and Brief in Suport (“Motion to Dismiss Counterclaim”) at 1 (docket entry 31).
Modglin has since filed the same counterclaim, which now includes his signature at
the end of the document. Counterclaim by Defendant (“Signed Counterclaim”) at 5
(docket entry 32). However, this new document does not contain his address, e-mail
address, or telephone number. Id.
In its motion to strike Modglin’s counterclaim, Travelhost argues that the
counterclaim does not comply with Federal Rule of Civil Procedure 11(a). Rule 11(a)
requires that every pleading must be signed by an attorney or a pro se party, and that
it must state the signer’s address, e-mail address, and telephone number. Rule 11(a)
also states that “[t]he court must strike an unsigned paper unless the omission is
promptly corrected after being called to the attorney’s or party’s attention.” Because
Modglin submitted a signed counterclaim, Travelhost’s motion to strike is denied.
In its motion to dismiss the counterclaim, Travelhost argues that Modglin does
not have standing to pursue any of these claims against Travelhost. Instead, RCP is
the party that would have standing to bring a counterclaim against Travelhost, since
it is the party that entered into the contracts with Travelhost. While Modglin did
sign the contracts, it was solely in his capacity as a member of the limited liability
company RCP. The only way in which Modglin is personally bound by these
contracts is under Addendum A, where Modglin agreed that the non-compete clause
would be personally binding on him. Attachment to Motion to Dismiss at 10 (docket

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entry 31-1). As a result, Travelhost’s motion to dismiss Modglin’s counterclaims is
granted.
B. Motion for Default Judgment on Monetary Damages Against RCP
On December 27, 2011, Travelhost filed a motion for default judgment on
monetary damages against RCP. Plaintiff’s Request for Default Judgment against
Defendant, The Real Chicago Publishing, LLC, on Monetary Damages (“Motion for
Default”) at 1 (docket entry 49). Modglin and RCP filed a response to the motion
for default judgment. Response to Plaintiff’s Request for Default Judgment against
Defendant, the Real Chicago Publishing, LLC, on Monetary Damages (“Response to
Motion for Default”) at 1 (docket entry 50). Modglin signed this response, on behalf
of both himself and RCP. Travelhost has filed a motion to strike Modglin and RCP’s
response. Reply to and Motion to Strike Response to Plaintiff’s Request for Default
Judgment Against Defendant, The Real Chicago Publishing, LLC, on Monetary
Damages (“Motion to Strike Response to Motion for Default”) at 1 (docket entry
51).
A corporation “cannot appear in proper person as a corporation or through its
corporate officer.” Southwest Express Company v. Interstate Commerce Commission, 670
F.2d 53, 56 (5th Cir. 1982). “It can enter an appearance in this court only through
an attorney admitted to practice before this court.” Id. Because RCP’s response was

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filed by Modglin, who is not an attorney, Travelhost’s motion to strike must be
granted.
Moreover, Travelhost’s motion for default judgment on monetary damages is
granted. The plaintiff shall submit a proposed order to the court no later than
March 9, 2012. This order shall state the monetary damages it seeks from RCP.
III. CONCLUSION
For the reasons stated above, (1) Travelhost’s motion to strike Modglin’s
counterclaim is DENIED; (2) Travelhost’s motion to dismiss Modglin’s counterclaim
is GRANTED; (3) Travelhost’s motion to strike Modglin’s and RCP’s response to its
motion for default judgment is GRANTED; and (4) Travelhost’s motion for default
judgment on monetary damages against RCP is GRANTED.
SO ORDERED.

February 27, 2012.

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A. JOE FISH
Senior United States District Judge

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