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Cajun Steamer Ventures LLC v. Thompson

United States District Court, N.D. Alabama, Southern Division

July 12, 2019




         This matter comes before the court on Defendant Jeffrey Scott Thompson's “Motion to Dismiss Second Amended Complaint.” (Doc. 19). Plaintiff Cajun Steamer Ventures, LLC (“CS Ventures”) filed this suit containing 14 counts against Mr. Thompson, a former CS Ventures employee, for incidents occurring after Mr. Thompson signed a Severance Agreement and Release of Claims (“Release”) and Restrictive Covenant Agreement (“RCA”) with CS Ventures. CS Ventures alleges that Mr. Thompson violated various provisions of both contracts; that, in the event the court finds that the RCA was void, the Release was also void; and that Mr. Thompson committed various torts, including defamation, intentional interference with a contract, conversion, and fraud.

         Mr. Thompson moves to dismiss CS Ventures' Second Amended Complaint for two reasons: (1) the complaint is a shotgun pleading in violation of Federal Rules of Civil Procedure 8(a)(2) and 10(b), and (2) the complaint fails to state a claim upon which relief can be granted in violation of Rule 12(b)(6). The parties have fully briefed the motion, and the motion is now ripe for review. For the reasons discussed below, the court will GRANT IN PART and DENY IN PART Mr. Thompson's motion to dismiss. (Doc. 19).

         I. Background

         Cajun Steamer Bar & Grille (“Cajun Steamer”) is a restaurant owned by CS Ventures with locations in Hoover, Trussville, and Huntsville, Alabama, and Franklin, Tennessee. When Cajun Steamer's first location opened in 2004, Mr. Thompson was employed by CS Ventures and in charge of restaurant operations for Cajun Steamer.

         In 2014 or 2015, CS Ventures built the Cajun Steamer Huntsville location. It hired Anything Audio & Video, LLC to install audio and visual equipment, which cost “tens of thousands of dollars.” (Doc. 14 at 14). Mr. Thompson allegedly used supplies from this project and invoiced CS Ventures supposedly for audio and video equipment from Anything Audio & Video, but was actually for work performed on his house. In the process, Mr. Thompson “specifically made false representations and also suppressed information which was material to this action.” (Id. at 15). During this time, Mr. Thompson also allegedly “diverted equipment bought by [CS Ventures] and used the equipment expressly for installation at [his] house.” (Id. at 14). Mr. Thompson also suppressed this information.

         On February 2, 2016, Mr. Thompson and CS Ventures executed the Release and RCA. The Release “set[] forth the respective rights and obligations of [Mr. Thompson and CS Ventures] in connection with the termination of the employment of [Mr. Thompson].” (Doc. 14 at 2). According to the Release, Mr. Thompson's termination was effective as of February 1, 2016. CS Ventures paid Mr. Thompson $1.19 million to execute the two agreements- approximately 10 times his salary.

         The RCA prohibited Mr. Thompson from acting in conflict with the “Business, ” defined as CS Ventures' “operation of five (5) Cajun Steamer Bar and Grill restaurants in Alabama, Tennessee, and Texas, serving Louisiana style cuisine, including without limitation, seafood, wings, soups, salads and chicken.” (Doc. 14-2 at 2). Specifically, Mr. Thompson could not (1) “engage in the Business within a fifty (50) mile radius of any of the current locations of the Cajun Steamer restaurants operated by the Company in Alabama, Tennessee and Texas”; (2) “recruit, solicit or otherwise contact customers or prospective customers of the Company for the purpose of engaging in the Business”; (3) “recruit, solicit or induce any person or entity, who was an employee, agent, independent contractor or representative of the Company . . . to cease their employment, engagement or other relationship with the Company or solicit the services of such person”; or (4) disclose certain confidential and trade secret information related to the Business. (Id. at 2-3).

         The RCA allowed CS Ventures to sue Mr. Thompson, including for temporary and permanent injunctions, if Mr. Thompson breached or threatened to breach the RCA.

         In the Release, Mr. Thompson agreed to “not willfully perform any acts (such as defamatory comments or threats of violence or vengeful acts) which are detrimental to the name, business or reputation of Company or Releasees.” (Doc. 14-1 at 3). He also agreed to indemnify CS Ventures for the cost and/or damages caused by “the beach of any covenant, agreement or obligation.” (Id. at 5).

         In conjunction with the execution of the agreements with Mr. Thompson, X4 Investment Partners, LLC-the current parent company of CS Ventures-executed a Membership Interest Purchase Agreement with James T. Powers on February 9, 2016. Through this agreement, X4 Investments acquired Mr. Powers's 50% membership interest in Solstice Investments, LLC in exchange for $1, 189, 859.92. Pursuant to Section 6.3 of the Purchase Agreement, Mr. Thompson's execution and delivery of the Release was a condition precedent to X4's obligation to close the Purchase Agreement transaction with Mr. Powers.

         Following signing the Release and RCA, Mr. Thompson allegedly began contacting employees to “discourage them from working for Cajun Steamer.” (Doc. 14 at 4).

         In late June or early July 2018, Mr. Thompson visited the Hoover location of Cajun Steamer, and made allegedly defamatory remarks to Cajun Steamer employees “and others.” (Doc. 14 at 5). Specifically, Mr. Thompson told a manager that Chandler Buie, who owns all outstanding membership interests in X4, “did not understand the business, . . . was not qualified to run the business, and [Mr. Thompson] questioned his commitment to the Cajun Steamer restaurants.” (Id.).

         On July 13, 2018, Mr. Thompson “contacted numerous employees and customers to make an unknown announcement.” (Doc. 14 at 5). At the Trussville location of Cajun Steamer, Mr. Thompson announced he would be opening a Cajun restaurant on Highway 150 in Hoover, Alabama. This location would be within 50 miles of the Hoover and Trussville locations of Cajun Steamer.

         Mr. Thompson “then stole alcohol from the bar and drank until 3 a.m., ” although he did pay for alcohol early in the evening. (Doc. 14 at 5). “At some point during the evening[, ] he disrobed in the presence of Cajun Steamer employees.” (Id.).

         Mr. Thompson later solicited the General Manager and Kitchen Manager[1] of the Trussville location to leave his or their position as Cajun Steamer and work for Mr. Thompson's new restaurant.

         Mr. Thompson has also at unknown times “stated to numerous individuals that he is buying back Cajun Steamer.” (Doc. 14 at 6). Prospective purchasers of Cajun Steamer have approached CS Ventures, and CS Ventures claims that Mr. Thompson's statements “were made to intentionally interfere with these proposed sales and potentially to financially harm Plaintiff.” (Id.).

         CS Ventures filed this suit alleging 14 causes of action against Mr. Thompson. CS Ventures alleges four breaches of contract: (1) breach of the RCA's non-compete clause; (2) breach of the RCA's non-solicit clause; (3) breach of the RCA's confidentiality clause; and (4) breach of the Release. It alleges three arguments in support of rescission of the Release, in the event that the court finds the RCA void: (1) inadequate consideration; (2) fraudulent inducement; and (3) mutual mistake of fact. It alleges five torts: (1) defamation; (2) intentional interference with contract; (3) conversion of alcohol and food; (4) conversion of electronic equipment; and (5) fraud and/or suppression. CS Ventures raises two final claims: (1) unjust enrichment; and (2) a request for preliminary and permanent injunctions to enforce the non-compete, non-solicit, and confidentiality provisions of the RCA.

         II. Standard of Review

         A Rule 12(b)(6) motion to dismiss attacks the legal sufficiency of the complaint. Generally, the Federal Rules of Civil Procedure require only that the complaint provide “‘a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed.R.Civ.P. 8(a)). A plaintiff must provide the grounds of his entitlement, but Rule 8 generally does not require “detailed factual allegations.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley, 355 U.S. at 47). It does, however, “demand[] more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Pleadings that contain nothing more than “a formulaic recitation of the elements of a cause of action” do not meet Rule 8 standards nor do pleadings suffice that are based merely upon “labels or conclusions” or “naked assertions” without supporting factual allegations. Twombly, 550 U.S. at 555, 557.

         The Supreme Court explained that “[t]o 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.'” Iqbal, 556 U.S. at 678 (quoting and explaining its decision in Twombly, 550 U.S. at 570). To be plausible on its face, the claim must contain enough facts that “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. Although “[t]he plausibility standard is not akin to a ‘probability requirement, '” the complaint must demonstrate “more than a sheer possibility that a defendant has acted unlawfully.” Id. “Where a complaint pleads facts that are merely consistent with a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.'” Id. (quoting Twombly, 550 U.S. at 557).

         The Supreme Court has identified “two working principles” for the district court to use in applying the facial plausibility standard. The first principle is that, in evaluating motions to dismiss, the court must assume the veracity of well-pleaded factual allegations; however, the court does not have to accept as true legal conclusions even when “couched as [] factual allegation[s]” or “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Iqbal, 556 U.S. at 678. The second principle is that “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 679. Thus, under prong one, the court determines the factual allegations that are well-pleaded and assumes their veracity, and then proceeds, under prong two, to determine the claim's plausibility given the well-pleaded facts. That task is “context-specific” and, to survive the motion, the allegations must permit the court based on its “judicial experience and common sense . . . to infer more than the mere possibility of misconduct.” Id. If the court determines that well-pleaded facts, accepted as true, do not state a claim that is plausible, the claim must be dismissed. Id.

         A “shotgun” style complaint exists when “each count . . . adopts the allegations of all preceding counts. Consequently, allegations of fact that may be material to a determination of count one, but not count four, are nonetheless made a part of count four. . . . [I]t is virtually impossible to know which allegations of fact are intended to support which claim(s) for relief.” Paylor v. Hartford Fire Ins., 748 F.3d 1117, 1126 (11th Cir. 2014) (quoting Anderson v. Dist. Bd. of Trs. of Cent. Fla. Cmty. Coll., 77 F.3d 364, 366 (11th Cir. 1996)).

         The purpose of Rule 8 is to provide a defendant notice of the claim and the facts supporting it. Grimsley v. Marshalls of MA, Inc., 284 Fed.Appx. 604, 610 (11th Cir. 2008) (“The point [of Rule 8] is to give the defendant fair notice of what the claim is and the grounds upon which it rests.”). Rule 10 works in conjunction with Rule 8 by requiring each claim “founded on a separate transaction or occurrence to be stated in separate counts if needed for clarity.” Id. “These rules work together so that [the plaintiff's] adversary can discern what he is claiming and frame a responsive pleading.” Id.

         III. Discussion

         Mr. Thompson raises two main arguments why the court should dismiss this case. First, he contends that the entire complaint is a shotgun pleading in violation of Rules 8 and 10. Second, he contends that 10 of the 14 counts should be dismissed for failure to state a claim pursuant to Rule 12(b)(6). Specifically, he argues that (1) the non-compete clause fails to comply with Alabama law; (2) the non-solicit clause fails to comply with Alabama law; (3) adequate consideration was given for the RCA and Release, so the Release should not be set aside; (4) the complaint contains no allegation of fraudulent inducement; (5) the complaint contains no allegation of mutual mistake; (6) the complaint contains no allegation of breach of the confidentiality agreement; (7) Mr. Thompson did not breach the Release because he did not defame CS Ventures, only allegedly Mr. Buie; (8) CS Ventures cannot recover for an allegedly defamatory statement made against Mr. Buie; (9) the complaint fails to allege facts regarding intentional interference with contract; and (10) CS Ventures would have an adequate remedy at law, so unjust enrichment is inappropriate. The court will address each argument in turn.

         a. Shotgun pleading

          Mr. Thompson argues that CS Ventures' Second Amended Complaint is merely a shotgun pleading. Specifically, Mr. Thompson points to the statement “Plaintiff incorporates all previous paragraphs as if fully stated herein” before each count in the complaint.” He contends that this statement prevents him from being able to discern which factual allegations apply to each count, and so he cannot formulate an answer to the complaint. Additionally, he contends that CS Ventures failed to set out each claim for relief in a separate count and failed to allege “the who, what, when, where, and how for each element, except scienter, of each claim for relief.” (Doc. 19 at 10 (quoting United States ex rel. Creighton v. Beauty Basics Inc., No. 2:13-CV-1989-VEH, 2016 WL 3519365, at *3 (N.D. Ala. June 28, 2016))).

         The court acknowledges Mr. Thompson's frustration with CS Ventures' complaint. CS Ventures included the bare minimum facts, alleged nearly as many counts as pages in the complaint, and incorporated by reference all paragraphs-regardless of relevance-in all counts alleged. But while the complaint is by no means a model pleading, it does not sink to the level of being a shotgun pleading.

         Rule 8 states that a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The courts have defined what “short and plain” means, and what is too short and too plain. “Shotgun pleadings are those that incorporate every antecedent allegation by reference into each subsequent claim for relief or affirmative defense.” Wagner v. First Horizon Pharm. Corp., 464 F.3d 1273, 1279 (11th Cir. 2006). Such a pleading “wreak[s] havoc on the judicial system” by “divert[ing] already stretched judicial resources into disputes that are not structurally prepared to use those resources efficiently.” Id. (quoting Byrne v. Nezhat, 261 F.3d 1075, 1130 (11th Cir. 2001)).

         As the first sentence in each of the 14 claims, CS Ventures notes “Plaintiff incorporates all previous paragraphs as if fully stated herein.” (Doc. 14 at 6-8, 10-16). CS Ventures failed to tailor the incorporation by reference to the specific facts alleged in support of the count, and even incorporated each count into future counts. But each count does include a few general facts in support of the allegation.

         For example, in Count Ten for conversion of food and alcohol, the complaint incorporates by reference all facts, and then adds three sentences that (1) “Defendant wrongfully took possession of [Plaintiff's] food and alcohol, ” (2) “Defendant did not pay for the food and alcohol, ” and (3) “Plaintiff was injured by Defendant's actions.” (Id. at 13). While not the most robust description, Mr. Thompson is on notice of what facts CS Ventures alleges in support of Count Ten even though the complaint incorporated by reference all previous paragraphs. Looking back to the fact section of the complaint with this frame of reference, Mr. Thompson can see that the relevant allegations are those relating to the July 13, 2018 incident at the Trussville location of Cajun Steamer, when CS Ventures alleges that Mr. Thompson “stole alcohol from the bar and frank until 3 a.m.” (Doc. 14 at 5).

         Rule 10 notes that “[a] party must state its claims or defenses in numbered paragraphs, each limited as far as practicable to a single set of circumstances.” Fed.R.Civ.P. 10(b). CS Ventures did separate each claim into numbered paragraphs, and each of the 14 claims was limited to a single set of circumstances-ignoring the unhelpful “Plaintiff incorporates all previous paragraphs as if fully stated herein” at the beginning of each count. Again, while the claims did not helpfully list the exact paragraphs where the facts in support were located, each claim included a brief statement of the facts in support that sufficiently gave Mr. Thompson notice of the claims alleged and the facts alleged in support of those claims. So the complaint did not violate Rule 10.

         Mr. Thompson seeks to have the court enforce an instruction set forth by Judge Hopkins in Creighton. In Creighton, the plaintiff filed a shotgun pleading alleging fraud, which has a heightened pleading standard under Rule 9(b). 2016 WL 3519365, at *1-2. Judge Hopkins instructed the plaintiff to refile her complaint, noting that “the complaint must include the who, what, when, where, and how for each element, except scienter, of each claim for relief. The previous sentence should be taken literally . . . .” Id. at *3. But, apart from Count Four alleging fraudulent inducement and Count Twelve alleging fraud and/or suppression, the heightened pleading standard under Rule 9(b) does not apply to this complaint. So Judge Hopkins's instruction, which is tailored to the requirements of Rule 9(b), does not apply to this case.

         Because CS Ventures' complaint did provide sufficient individual facts in each count to inform Mr. Thompson of which facts would be used in support of which count, and because the complaint stated its claims in numbered paragraphs limited to a single set of circumstances, this complaint is not a shotgun pleading. So, the court will DENY the motion to dismiss on the grounds that the complaint is a shotgun pleading.

         b. Failure to state a claim

         Mr. Thompson argues that the court should dismiss Counts One, Two, Three, Four, Five, Six, Seven, Eight, Nine, and Thirteen for failure to state a claim. Each count will be discussed in turn.

         i. Count One: Breach of the non-compete clause

         Mr. Thompson contends that CS Ventures failed to state a claim of breach of the non-compete clause because the non-compete clause is unenforceable. Specifically, he argues that the non-complete clause violated Alabama law because he was not an employee at the time of signing the contract.

         Under Alabama law, a contract that restrains a person from “exercising a lawful profession, trade, or business of any kind” is void unless it falls within an exception. Ala. Code § 8-1-190(a) (2015).[2] Generally, “[c]ontracts restraining employment are looked upon with disfavor, because they tend not only to deprive the public of efficient service, but ...

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