Bradford v. Nationwide Insurance Company of America et al

Filing 41

ORDER GRANTING 27 ISO's Motion to Dismiss; GRANTING 29 Nationwide's Motion to Dismiss. Signed by Judge Robert Pitman. (td)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
MARK BRADFORD,
Plaintiff,
v.
NATIONWIDE INSURANCE COMPANY
OF AMERICA; NATIONWIDE MUTUAL
INSURANCE COMPANY; ON YOUR SIDE
NATIONWIDE INSURANCE AGENCY,
INC.; NATIONWIDE INSURANCE
COMPANY OF FLORIDA; NATIONWIDE
GENERAL INSURANCE COMPANY;
PCM LOGISTICS, LLC; AF BUSINESS
SERVICES, LCC; ISO CLAIMS SERVICES,
INC.; and AGENT DOES 1-999;
Defendants.

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1:17-CV-1067-RP

ORDER
Before the Court is a second set of motions to dismiss filed by Defendants Nationwide
Insurance Company of America; Nationwide Mutual Insurance Company; On Your Side
Nationwide Insurance Agency, Inc.; Nationwide Insurance Company of Florida; and Nationwide
General Insurance Company (collectively, “Nationwide”), (Dkt. 29), and Defendant ISO Claims
Services, Inc. (“ISO Claims”) (altogether, “Defendants”), (Dkt. 27). Having considered the parties’
arguments, the record, and the relevant law, the Court finds that Defendants’ motions to dismiss
should be granted.
I. BACKGROUND
Plaintiff Mark Bradford (“Bradford”) is a software developer who allegedly develops and
distributes products that create forms used in the home mortgage lending and insurance industries
(the “WinSketch products”). (Am. Compl., Dkt. 23, at 2–3). According to Bradford, he owns the
copyright for a product called WinSketch Nationwide Insurance, which he developed for
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Nationwide, but Nationwide lacks permission to use. (Id. at 4–5). Bradford alleges that Nationwide
has and continues to use WinSketch Insurance without a license. (Id. at 5–6). Bradford alleges that
ISO Claims assigned its license to use an unidentified Winsketch software product without
permission and that ISO Claims is copying that software without authorization. (Id. at 7).
In his original complaint, Bradford asserted causes of action against Nationwide for tortious
interference with contract, fraud, violations of the Texas Deceptive Trade Practices Act (“DTPA”),
and violations of federal copyright law. (Compl., Dkt. 1, at 8–11). Bradford named ISO Claims as a
defendant in his initial complaint but stated no claims against it. (See id.). Both Nationwide and ISO
Claims moved to dismiss Bradford’s original claims against under Federal Rule of Civil Procedure
12(b)(6). (Dkts. 3, 9). The Court granted those motions and dismissed all of Bradford’s original
claims against Defendants without prejudice. (Dkt. 21). The Court granted Bradford leave to amend,
(id. at 7), and Bradford did so, (Dkt. 23).
Bradford’s amended complaint abandons his DTPA and tortious interference claims. (Id.).
Remaining are only a copyright infringement claim against Nationwide, his fraud claim against
Nationwide, and a copyright infringement claim against ISO Claims. (Id. at 4–8). Defendants seek
dismissal of these amended claims under Rule 12(b)(6). (Dkts. 27, 29). Bradford timely responded to
each motion. (Dkts. 31, 32).
II. LEGAL STANDARD
Pursuant to Rule 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon
which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “To survive a Rule 12(b)(6) motion to dismiss,
a complaint ‘does not need detailed factual allegations,’ but must provide the [plaintiffs’] grounds for
entitlement to relief—including factual allegations that when assumed to be true ‘raise a right to
relief above the speculative level.’” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). That is, “a complaint must contain sufficient factual

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matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “[T]he tenet that a court must accept as true
all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals
of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.
“[W]here 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 ‘show[n]’—that the pleader is entitled to
relief.” Id. at 679 (quotation marks and citation omitted).
In deciding a motion to dismiss, a court may consider documents incorporated into the
complaint by reference. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). A court
may also consider 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). Finally, a court may also take
judicial notice of matters of public record. Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011); see
also Norris v. Hearst Tr., 500 F.3d 454, 461 n.9 (5th Cir. 2007) (“[I]t is clearly proper in deciding a
12(b)(6) motion to take judicial notice of matters of public record.”).
III. DISCUSSION
A. Nationwide
1. Copyright Infringement
The Copyright Act of 1976 bars a plaintiff from bringing an infringement action for any
United States work until preregistration or registration of the copyright claim has been made. 17
U.S.C. § 411(a). “If a plaintiff does not have a copyright registration, her claim may be dismissed for
failure to state a claim.” Real Estate Innovations, Inc. v. Hous. Ass’n of Realtors, Inc., 422 F. App’x 344,
348 (5th Cir. 2011). Bradford alleges that he owns the copyright registrations for two software
products: WinSketch Pro (Registration No. TX-8-384-187) and WinSketch v2.x (Registration No.

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TX-8-424-644). (Am. Compl., Dkt. 23, at 4). Certificates of registration are attached to Bradford’s
complaint. (Dkt. 23-1). However, Bradford’s amended complaint does not allege that Nationwide
has infringed his exclusive rights to either of these products. Instead, Bradford alleges that he “owns
a valid copyright to” a third product with a different name: “the Nationwide Insurance version of
WinSketch Nationwide Insurance software.” (Am. Compl., Dkt. 23, at 4–5). In fact, “WinSketch
Nationwide Insurance” is the only product to which Bradford refers throughout his allegations. (See
id. at 5–7). For example, Bradford alleges that Nationwide “had access to WinSketch Nationwide
Insurance software,” “made numerous unauthorized copies of WinSketch Nationwide Insurance
software,” and violated his “exclusive right to reproduce WinSketch Nationwide Insurance version
[sic] software.” (Id.). To further confuse the matter, as evidence of Nationwide’s access and use,
Bradford attached to his complaint a November 2013 letter from Nationwide offering to buy a
license to continue using a fourth product: WinSketch version 7.8.3. (Schaffer Letter, Dkt. 23-3).
Nationwide argues that Bradford’s copyright claim must be dismissed because his amended
complaint does not allege that the infringed product is registered with the Copyright Office. (2nd
Nationwide Mot. Dismiss, Dkt. 29, at 8–9). Bradford responds that his copyright ownership for
“WinSketch Nationwide Insurance” is evidenced by the registration certificates for WinSketch Pro
and WinSketch v2.x attached to his amended complaint. (Resp. 2nd Nationwide Mot. Dismiss, Dkt.
32, at 2). Of course, Bradford does not have to prove his allegations at this stage of the litigation;
they must be taken as true if they are more than conclusory. Iqbal, 556 U.S. at 678. And Bradford
does allege that he “owns a valid copyright to the . . . WinSketch Nationwide Insurance software,”
the work that Nationwide allegedly infringed. (Am. Compl., Dkt. 23, at 4; see also id. at 5–7). By itself,
that might suffice to plausibly allege his copyright registration for that work.
However, the Court may consider documents that Bradford attaches to his own pleadings,
Lone Star Fund V, 594 F.3d at 387, which in this instance do not match the name of the allegedly

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infringed work. Nowhere does Bradford allege that Nationwide has copied or distributed WinSketch
Pro or WinSketch v2.x in violation of his exclusive rights in those registered works. Nowhere does
he allege that either of those two registered products are identical to “WinSketch Nationwide
Insurance software,” the work that Nationwide allegedly copied. Indeed, by pointing to his
registrations for WinSketch Pro and WinSketch v2.x as support for his allegation that he has
registered a copyright for “WinSketch Nationwide Insurance,” Bradford’s pleadings render it
implausible that he does in fact own a copyright for “WinSketch Nationwide Insurance.” And
without a plausible allegation that he owns a copyright registration for the product that Nationwide
allegedly infringed, his infringement claim against Nationwide must be dismissed. Real Estate
Innovations, 422 F. App’x at 348.
2. Fraud
Bradford’s second cause of action against Nationwide is labeled “fraud.” (Am. Compl., Dkt.
23, at 7–8). To prove a fraud claim under Texas law, a plaintiff must show:
(1) the defendant “made a material representation that was false”; (2) the defendant
“knew the representation was false or made it recklessly as a positive assertion
without any knowledge of its truth”; (3) the defendant intended to induce the
plaintiff to act upon the representation; and (4) the plaintiff actually and justifiably
relied upon the representation and suffered injury as a result.
JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 653 (Tex. 2018), reh’g denied
(June 15, 2018) (quoting Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex.
2001).
The Court dismissed Bradford’s original fraud claim because it did not meet the
requirements of Federal Rule of Civil Procedure 9(b): he did not identify a fraudulent statement or
any details about when and where such a statement was made. (Order, Dkt. 21, at 5).1 In his

Rule 9(b) requires a plaintiff to “state with particularity the circumstances constituting fraud or mistake.” See also Carroll
v. Fort James Corp., 470 F.3d 1171, 1174 (5th Cir. 2006) (“Rule 9(b) requires that plaintiffs plead enough facts to illustrate
“the ‘who, what, when, where, and how’ of the alleged fraud.”) (citation omitted).
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amended complaint, Bradford specifies the nature of the alleged fraud. He contends that the
November 2013 letter from Nationwide “was fraudulent to lead Bradford into believing they
[Nationwide] had a fully paid up perpetual license.” (Am. Compl., Dkt. 23, at 8). In that letter,
Nationwide states that it believes it “has used and continues to use the WinSketch product in
compliance with its applicable license agreement.” (Id.). According to Bradford, this representation
“is fraudulent and Nationwide Insurance continued to use Bradford’s WinSketch Nationwide
Insurance version software without authority and with fraudulent intent of having a perpetual
license.” (Id.).
As Nationwide points out, nowhere does Bradford allege that he actually relied—justifiably
or otherwise—on this alleged misrepresentation. (2nd Nationwide Mot. Dismiss, Dkt. 29, at 22).
Bradford offers no objection; indeed, his response is silent as to his fraud claim. (See Resp. 2nd
Nationwide Mot. Dismiss, Dkt. 32). Even assuming that Bradford plausibly alleged the remaining
elements of a fraud claim, this deficiency is fatal to his claim at this stage in the litigation. Without
allegations of justifiable reliance, Bradford fails to state a plausible claim for relief on his fraud claim
against Nationwide. That claim must be dismissed under Rule 12(b).
B. ISO Claims
Bradford asserts a single claim of copyright infringement against ISO Claims. (Am. Compl.,
Dkt. 23, at 7). He alleges as follows:
ISO Claims Services Inc. by failing to get consent of Bradford to assignment of
WinSketch software violated 17 U.S.C. § 106(1)-(3) under a Software Technology
License Agreement dated June 7, 1996 by and between Bradford and ISO Claims
Services, Inc. on behalf of its ACI Division that it sold in 2014 and on information
and belief Bradford has knowledge of the new entity that acquired ACI Division
from ISO Claims Services is still copying and using without Bradford’s authorization
the WinSketch software version 7 that is compatible with Windows 10 operating
systems and was in use as of 02/17.

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(Id.). Bradford appears to allege two copyright violations: (1) an assignment by ISO Claims
of an unspecified WinSketch product in 1996 and (2) ongoing copying of WinSketch 7 by
some entity that is not ISO Claims. (See id.).
The former is time-barred; federal copyright actions are subject to a three-year
statute of limitations. 17 U.S.C. § 507(b). The latter concerns a different, unnamed
defendant: the “new entity that acquired ACI Division from ISO Claims Services.” (Am.
Compl., Dkt. 23, at 7). Whichever entity that is, it is not ISO Claims. Bradford supplies no
argument to the contrary in his response to ISO’s motion. (See Resp. 2nd ISO Claims Mot.
Dismiss, Dkt. 31). Because Bradford does not allege that ISO Claims has violated any of his
exclusive rights in a copyrighted work within the applicable statute of limitations, his claim
against ISO Claims must be dismissed.
IV. LEAVE TO AMEND
Although Federal Rule of Civil Procedure 15(a)(2) permits a court to grant leave to amend
pleadings and “evinces a bias in favor of granting leave to amend, it is not automatic.” Matter of
Southmark Corp., 88 F.3d 311, 314 (5th Cir. 1996) (internal quotation marks and citation omitted).
Among other things, “a party must ‘expressly request’ leave to amend.” Law v. Ocwen Loan Servicing,
L.L.C., 587 F. App’x 790, 796 (5th Cir. 2014) (quoting United States ex rel. Willard v. Humana Health
Plan of Tex. Inc., 336 F.3d 375, 387 (5th Cir. 2003)). Even though “[a] formal motion is not always
required,” the requesting party must still “set forth with particularity the grounds for the amendment
and the relief sought.” Willard, 336 F.3d at 387. When a plaintiff fails to request leave to amend or
indicate what might be added to the complaint if amendment were allowed, a district court may
dismiss the cause of action with prejudice. See Joseph v. Bach & Wasserman, L.L.C., 487 F. App’x 173,
178 (5th Cir. 2012). Bradford has neither requested leave to amend his amended complaint nor

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indicated in what he might add to a second amended complaint. (See Resp. Mot. Dismiss, Dkt. 8).
The Court therefore declines to sua sponte permit Bradford to amend his complaint a second time.
V. CONCLUSION
For the reasons given above, IT IS ORDERED that ISO Claims’s Motion to Dismiss,
(Dkt. 27), and Nationwide’s Motion to Dismiss, (Dkt. 29), are each GRANTED. Bradford’s claims
against Defendants are DISMISSED WITH PREJUDICE.
SIGNED on January 28, 2019.

_____________________________________
ROBERT PITMAN
UNITED STATES DISTRICT JUDGE

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