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Handshoe v. Perret

United States District Court, S.D. Mississippi, Southern Division

October 26, 2018

DOUGLAS HANDSHOE PLAINTIFF
v.
VAUGHN PERRET, et al. DEFENDANTS

          MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF/COUNTER-DEFENDANT DOUGLAS HANDSHOE'S [244] MOTION TO DISMISS

          HALIL SULEYMAN OZERDEN UNITED STATES DISTRICT JUDGE

         BEFORE THE COURT is pro se Plaintiff/Counter-Defendant Douglas Handshoe's Motion to Dismiss [244] the Counterclaims [233] of pro se Defendant/Counterclaimant Charles Leary. This Motion is fully briefed. After due consideration of the Motion, the record, and relevant legal authority, the Court finds that Handshoe's Motion to Dismiss [244] should be granted in part and denied in part. Charles Leary's Counterclaims [233] against Douglas Handshoe for (1) violation of Slabbed New Media, LLC's bankruptcy stay under 11 U.S.C. § 362; (2) fraud; (3) abuse of process; (4) misrepresentation under 17 U.S.C. § 512(f), related to the July 14, 2014, counter-notification sent to YouTube; and (5) tortious interference with contractual relations and business relations, will be dismissed. Leary's Counterclaims [233] for (1) malicious prosecution; (2) misrepresentation under 17 U.S.C. § 512(f), related to the “late January, 2016, ” counter-notification sent to Amazon Web Services; and (3) copyright infringement, will proceed.

         I. BACKGROUND

         Plaintiff/Counter-Defendant Douglas Handshoe (“Handshoe”) initiated this lawsuit by filing a Complaint [1] against Defendant/Counterclaimant Charles Leary (“Leary”) and other Defendants, including Defendant Trout Point Lodge, Ltd. (“Trout Point Lodge”), on November 16, 2015. See Compl. [1] at 1. According to the Third Amended Complaint, which is now the operative pleading, Handshoe, who is the publisher of a website/blog owned by Slabbed New Media, LLC (“Slabbed New Media”), see 3d Am. Compl. [90] at 3, has been embroiled in litigation for years with certain of the Defendants in this case, including Leary and Trout Point Lodge, in various courts throughout the United States and Canada. Leary is, or at least was, one of the directors or officers of Trout Point Lodge, which is a luxury lodge in Nova Scotia, Canada. See Countercl. [233] at 4, 11.

         The Third Amended Complaint [90] advanced eight counts of misrepresentation pursuant to 17 U.S.C. § 512(f) related to purported “takedown notices” under the Digital Millennium Copyright Act, 17 U.S.C. § 512(f), dated from December 2012 to January 2016. 3d Am. Compl. [90] at 33-47. As to each count, Handshoe alleged that Defendants materially misrepresented that he and Slabbed New Media infringed various copyrights purportedly owned by Defendants. Id.

         The Third Amended Complaint also sought certain declarations, including that: (1) “to the extent Defendants own any valid copyright interest in the creative works in questions [sic] or have claimed to own any valid copyrights, Defendants have misused such copyrights rendering those Copyrights as unenforceable, ” id. at 49; (2) Plaintiff's “use of the photographs in question as agent for Slabbed New Media, LLC is lawful under the fair use doctrine and does not infringe on any of the Defendants' copyrights, ” id. at 50; (3) “as a matter of law [Plaintiff] has no liability in his personal capacity over content belonging to a third party in which he acts as agent pursuant to the Mississippi Limited Liability Act, ” id.; and (4) “as a matter of law each and every component judgment rendered in the case styled, Trout Point Lodge et al. v. Douglas Handshoe, Nova Scotia Supreme Court No. 41135 is REPUGNANT TO THE CONSTITUTION OF THE UNITED STATES OF AMERICA and unenforceable in the United States of America, ” under the Securing the Protection of our Enduring and Established Constitutional Heritage Act, 28 U.S.C. § 4101, et seq. (“SPEECH Act”), id. at 52. At this stage of the proceedings, all of Handshoe's claims against Leary and Trout Point Lodge have been dismissed.[1]

         On October 10, 2017, Leary filed an Answer, Defenses, and Counterclaims [171] against Handshoe in response to the Third Amended Complaint [90]. Leary advanced Counterclaims against Handshoe for (1) malicious prosecution; (2) fraud; (3) abuse of process; (4) misrepresentations under 17 U.S.C. § 512(f); (5) copyright infringement; and (6) tortious interference with contractual relations and business relations. See Countercl. [171] at 15-20.

         Handshoe later filed a Motion [191] for Sanctions pursuant to Federal Rule of Civil Procedure 11, and on April 17, 2018, the Court struck, among other filings, Leary's Answer, Defenses, and Counterclaims [171]. See Order [222] at 9-10. The Court permitted Leary to refile his Answer with Counterclaims, but directed that “no new counterclaims will be permitted.” Order [222] at 9-10. Leary re-filed his Counterclaims [233] on May 16, 2018, advancing claims against Handshoe for the following: (1) violation of Slabbed New Media, LLC's bankruptcy stay under 11 U.S.C. § 362; (2) malicious prosecution; (3) fraud; (4) abuse of process; (5) misrepresentations under 17 U.S.C. § 512(f); (6) copyright infringement; and (7) tortious interference with contractual relations and business relations. See Countercl. [233] at 23-31.

         With respect to the claim for violation of the automatic stay, Leary asserts that Handshoe commenced a supplementary proceeding in a different civil action to execute on a judgment debt belonging to Slabbed New Media that was part of that entity's bankruptcy estate, which Leary maintains violated the bankruptcy stay. Id. at 23-24. Leary also asserts that Handshoe has maliciously prosecuted the present case and has committed fraud and abuse of process with respect to other legal proceedings in different courts. Id. at 24-28. Leary further alleges that Handshoe made actionable misrepresentations under the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512(f), by sending two “counter-notifications” to Amazon Web Services and Yahoo, and that he infringed Leary's copyrights in four copyrighted photographic works. Id. at 28-30. Finally, Leary claims that Handshoe tortiously interfered with contractual relations and business relations by engaging a person to falsely claim an interest in purchasing Trout Point Lodge and by causing a person to check into the Lodge to disrupt normal business operations, threaten violence, and impugn Leary and his goodwill in the eyes of Lodge employees. Id. at 30-31.

         Handshoe now seeks dismissal of Leary's Counterclaims [233] pursuant to Federal Rule of Civil Procedure 12(b)(1), arguing that the Court lacks subject-matter jurisdiction over them and that Leary lacks standing to assert them. See Mot. to Dismiss [244] at 1-2. Handshoe alternatively seeks dismissal pursuant to Rules 9(b) and 12(b)(6) for failure to state a claim. See id.

         II. DISCUSSION

         A. Leary's new claim under 11 U.S.C. § 362

         As a threshold matter, Leary's present Counterclaims [233] contain an assertion that Handshoe violated Slabbed New Media, LLC's bankruptcy stay under 11 U.S.C. § 362, a claim which Leary had not raised in his original Counterclaims [171] stricken by the Court. While Leary mentioned the existence of an automatic stay in his original Counterclaims [171], see Countercl. [171] at 12-13, he did not assert a claim for violation of the automatic stay under 11 U.S.C. § 362 in that pleading, see Id. Because Leary improperly added this claim in his re-filed Counterclaims [233], in direct contravention of the Court's previous sanction Order [222] prohibiting the addition of new claims, the Court will grant Handshoe's Motion [244] to the extent it seeks to dismiss this claim. Leary's § 362 claim will be dismissed without prejudice.

         B. Leary's remaining Counterclaims

         1. Federal Rule of Civil Procedure 12(b)(1) and federal subject-matter jurisdiction

         Handshoe seeks dismissal of Leary's Counterclaims under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction and lack of standing. When faced with a Rule 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction,

a trial court has the power to dismiss for lack of subject matter jurisdiction on any one of three separate bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.

Crane v. Johnson, 783 F.3d 244, 250 (5th Cir. 2015) (quotation omitted). In this case, in resolving whether it has subject-matter jurisdiction over Leary's Counterclaims, the Court has relied upon the Counterclaims [233] supplemented by undisputed facts evidenced in the record. See id.

         “The basic statutory grants of federal-court subject-matter jurisdiction are contained in 28 U.S.C. §§ 1331 and 1332.” Borden v. Allstate Ins. Co., 589 F.3d 168, 171 (5th Cir. 2009). The Court must first consider whether it possesses either original federal question jurisdiction under § 1331 or diversity jurisdiction under § 1332.

         With respect to diversity of citizenship, the parties do not appear to dispute that Leary is a “stateless” United States citizen who has resided outside of this country since 1998. See, e.g., Ex. “1” [244-1] to Mot. [244] at 6 (copy of filing made on Leary's behalf in a separate proceeding in this Court); Br. [259] at 9 (“Leary agrees that he is a stateless United States citizen for purposes of diversity jurisdiction.”). The Court cannot possess original subject-matter jurisdiction over Leary's Counterclaims pursuant to 28 U.S.C. § 1332. See Coury v. Prot, 85 F.3d 244, 249-50 (5th Cir. 1996) (“it has been held consistently that a diversity suit may not be maintained under 28 U.S.C. § 1332(a)(1) by or against a United States citizen who is domiciled in a foreign country”).

         Pursuant to 28 U.S.C. § 1331, “[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. The well-pleaded-complaint rule governs whether a case “arises under” federal law for purposes of § 1331. Renegade Swish, L.L.C. v. Wright, 857 F.3d 692, 697 (5th Cir. 2017). “Under the well-pleaded complaint rule, a federal court does not have federal question jurisdiction unless a federal question appears on the face of the plaintiff's well-pleaded complaint.” Settlement Funding, L.L.C. v. Rapid Settlements, Ltd., 851 F.3d 530, 535 (5th Cir. 2017) (quotation omitted).

         When a district court has original jurisdiction over a civil action, 28 U.S.C. § 1367(a) provides that the court may also have

supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.

28 U.S.C. § 1367(a). The question § 1367(a) poses is “whether the supplemental claims are so related to the original claims that they . . . derive from a common nucleus of operative fact.” D'Onofrio v. Vacation Publications, Inc., 888 F.3d 197, 206 (5th Cir. 2018).

         2. The doctrine of standing

         “[T]he jurisdictional issue of standing is a legal question, ” and “[t]he party invoking federal jurisdiction bears the burden of establishing standing.” Crane, 783 F.3d at 250 (quotation omitted). Here, Handshoe asserts that Leary lacks standing to bring his Counterclaims in his personal capacity because Leary's claims actually belong to Trout Point Lodge. See Mem. [245] at 3, 4, 12. While Handshoe is not specific, in light of the authority cited in his Memorandum it appears that he is relying upon the doctrine of Article III standing. See Id. at 3 (citing Crane, 783 F.3d at 250).

         “Article III of the United States Constitution limits the jurisdiction of federal courts to actual ‘Cases' and ‘Controversies.'” Crane, 783 F.3d at 251 (citing U.S. Const., art. III, § 2). Article III standing requires “plaintiffs to allege such a personal stake in the outcome of the controversy as to justify the exercise of the court's remedial powers on their behalf.” Town of Chester, N.Y. v. Laroe Estates, Inc., 137 S.Ct. 1645, 1650 (2017) (quotation omitted).

         According to the United States Supreme Court,

[t]o establish Article III standing, the plaintiff seeking compensatory relief must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.

Id. (quotation omitted). A plaintiff, as the party invoking federal jurisdiction, bears the burden of establishing the three elements of Article III standing. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016), as revised (May 24, 2016). “Where, as here, a case is at the pleading stage, the plaintiff must clearly allege facts demonstrating each element.” Id. (quotation omitted).

         “Implicit in the first requirement of Article III standing is the notion that the injury in fact is particularized to the Plaintiffs.” Abbott v. BP Expl. & Prod., Inc., 851 F.3d 384, 388 (5th Cir. 2017) (citing Spokeo, Inc., 136 S.Ct. at 1548). “At the pleading stage, allegations of injury are liberally construed.” Little v. KPMG LLP, 575 F.3d 533, 540 (5th Cir. 2009). General factual allegations of injury resulting from a defendant's conduct may suffice when resolving a motion to dismiss because courts “presume that general allegations embrace those specific facts that are necessary to support the claim.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992) (quotation omitted); see also Little, 575 F.3d at 540. However, the Supreme Court has emphasized that “standing is not dispensed in gross.” Town of Chester, N.Y., 137 S.Ct. at 1650 (quotation omitted). Instead, “a plaintiff must demonstrate standing for each claim he seeks to press and for each form of relief that is sought.” Id.

         3. Analysis[2]

         In his original Complaint, Handshoe advanced claims arising under federal law against Leary and others for alleged misrepresentations under 17 U.S.C. § 512(f) related to “takedown notices” sent by Leary and others to various internet service providers. See 3d Am. Compl. [90] at 33-47. In turn, Leary asserted Counterclaims under federal law against Handshoe, including claims for misrepresentation under 17 U.S.C. § 512(f) and for copyright infringement. See Countercl. [233] at 28-30. The Court therefore has original subject-matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331.

         Leary also advances several Counterclaims arising under state law, specifically for malicious prosecution, fraud, abuse of process, and tortious interference with contractual relations and business relations. After consideration of the parties' arguments and relevant authority, the Court is of the opinion that Leary has not shown that the Court has original or supplemental jurisdiction over his fraud claims, his abuse of process claims unrelated to this case, and his tortious interference claims, because those claims are not so related to the claims within this ...


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