Angel Oak Mortg. Solutions LLC v. Mastronardi

593 F.Supp.3d 1234

ANGEL OAK MORTGAGE SOLUTIONS LLC, Plaintiff,

v.Victoria MASTRONARDI, Candy Davis, Eric Garcia, Scott Friedberg, and LendSure Mortgage Corp., Defendants.

Case No. 1:20-cv-4583-MLB

United States District Court, N.D. Georgia, Atlanta Division.

Signed March 23, 2022

Allison Brennan Bailey, Stacey McGavin Mohr, Eversheds Sutherland (US) LLP, Atlanta, GA, Michael Woodson, Scott R. McLaughlin, Eversheds Sutherland (US) LLP, Houston, TX, for Plaintiff.

Brian David Stoltz, David L. Pardue, Parker Poe Adams & Bernstein LLP, Atlanta, GA, for Defendants.

OPINION & ORDER

MICHAEL L. BROWN, UNITED STATES DISTRICT JUDGE

Plaintiff brings this action against Defendants for misappropriating its business information in violation of the Federal Defend Trade Secrets Act ("DTSA"), the Georgia Trade Secrets Act ("GTSA"), the Georgia Computer Systems Protection Act ("GCSPA"), and several other state laws. Defendants filed a partial motion to dismiss. (Dkt. 48.) The Court grants Defendants’ motion in part and denies it in part.

I. Background

Plaintiff Angel Oak Mortgage Solutions LLC is a company that provides non-qualified mortgage loans. (Dkt. 36 ¶ 15.) Defendants Victoria Mastronardi, Candy Davis, Eric Garcia, and Scott Friedberg (together, "Individual Defendants") used to work for Plaintiff. (Id. ¶¶ 24, 32–33, 37–38, 41–42, 49.) In 2020, they went to work for Defendant LendSure Mortgage Corp. (Id. ¶¶ 32, 37, 41, 49.) Shortly before doing so, they sent a variety of Plaintiff's business information to their personal email accounts. (Id. ¶¶ 56–61, 64, 66–69, 72–75.) This information falls into three buckets: (1) information Plaintiff characterizes as confidential and trade secrets,¹ (2) information Plaintiff characterizes as non -trade secrets,² and (3) information Plaintiff declines to characterize either way.³ Plaintiff claims some of this information "ended up on [Defendant] LendSure's email system." (Id. ¶¶ 58, 65.)

Plaintiff filed this lawsuit in 2020. It asserts claims for violations of DTSA (Count 1), violations of the GCSPA (Count 2), violations of GTSA (Count 3), breach of contract (Counts 4–5), tortious interference with contract (Count 6), breach of fiduciary duty (Count 7), civil conspiracy (Count 8), and aiding and abetting (Count 9). (Id. ¶¶ 77–119.) The crux of all these claims—beyond a few not at issue here—is that Defendants used Plaintiff's computer system to misappropriate Plaintiff's business information. The Court assumes each claim encompasses all of Plaintiff's allegedly misappropriated information because nothing in the complaint says otherwise. The exceptions are Plaintiff's trade-secret claims (Counts 1 and 3), which cannot include information Plaintiff itself characterizes as non -trade secrets, and Count 2, which Plaintiff pleads to include its "proprietary information that does not qualify as trade secret information." The Court thus interprets Counts 1 and 3 to involve only items identified in bucket one and Count 2 to involve only items identified in bucket two.

Defendants move to dismiss Plaintiff's GCSPA, fiduciary-duty, civil-conspiracy, and aiding-and-abetting claims (Counts 2 and 7–9) on the ground the GTSA preempts them. In the alternative, Defendant LendSure moves to dismiss Plaintiff's GCSPA and aiding-and-abetting claims (Counts 2 and 9) for failure to state a claim. Defendant Friedberg also moves to dismiss Plaintiff's DTSA and GTSA claims (Counts 1 and 3) for failure to state a claim.

II. Standard of Review

"To survive a motion to dismiss [under Rule 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "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." Id. This requires more than a "mere possibility of misconduct." Id. at 679, 129 S.Ct. 1937. Plaintiff's well-pled allegations must "nudge[ ] [his] claims across the line from conceivable to plausible." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

III. Discussion

A. Preemption (Counts 2 and 7–9)

Count 2 claims Defendants violated the GCSPA by "us[ing] improper means to access Angel Oak's computer[ ] system to take Angel Oak's proprietary information that does not qualify as trade secret information but still belongs exclusively to Angel Oak." (Dkt. 36 ¶ 86.) Count 7 claims Individual Defendants breached their fiduciary duties by "stealing Angel Oak's information." (Id. ¶ 107.) Count 8 claims Defendants conspired to accomplish "the theft and continuing misuse of Angel Oak's information and property." (Id. ¶ 111.) Count 9 claims Defendant LendSure "knew that the individual Defendants’ actions regarding Angel Oak's information constituted a breach of their fiduciary duties" and that Defendant LendSure "aided and abetted their actions by providing substantial assistance to them." (Id. ¶¶ 116–117.) Defendants say GTSA preempts these claims in their entirety. The Court concludes it preempts them only in part.

GTSA "supersede[s] conflicting tort, restitutionary, and other laws of this state providing civil remedies for misappropriation of a trade secret." O.C.G.A. § 10-1-767(a). But it does not affect (1) "[c]ontractual duties or remedies, whether or not based upon misappropriation of a trade secret"; (2) "[o]ther civil remedies that are not based upon misappropriation of a trade secret"; or (3) "[t]he definition of a trade secret contained in [another Georgia statute]." O.C.G.A. § 10-1-767(b). On the surface, this means GTSA preempts any non-contractual claims that allege or require the misappropriation of a trade secret.⁴ But Georgia courts have gone further.

They say it also preempts "lesser and alternate" claims based on the same facts, particularly where the alternate claim involves the same misappropriated information as the trade-secret claim. Robbins v. Supermarket Equip. Sales, LLC , 290 Ga. 462, 722 S.E.2d 55, 58 (2012).

The Georgia Supreme Court made this clear in Robbins . There, plaintiff asserted a single GTSA claim for misappropriation of its business drawings. The trial court found the drawings were not trade secrets. But, acting sua sponte, it still awarded equitable relief under another statute. The trial court thought GTSA did not preempt this relief because "the drawings were not ultimately found to be trade secrets under the act." Id. at 56, 58. The Georgia Supreme Court disagreed. It explained: "For the GTSA to maintain its exclusiveness, a plaintiff cannot be allowed to plead a lesser and alternate theory of restitution simply because the information does not qualify as a trade secret under the act." Id. at 58. "Rather, the GTSA preempts claims that rely on the same allegations as those underlying the plaintiff's claim for misappropriation of a trade secret." Id. "Since the trial court's award of general equitable relief under [the other statute] was based on the same conduct as the GTSA claim, i.e., the misappropriation of the drawings, such relief was preempted by [GTSA]." Id.

Applying these principles to our case eliminates some, but not all, of Counts 7–9. Like Plaintiff's GTSA claim, Counts 7–9 allege Defendants impermissibly used Plaintiff's computer system to take information Plaintiff characterizes as trade secrets. To this extent, Counts 7–9 "rely on the same allegations as those underlying the plaintiff's claim for misappropriation of a trade secret." And GTSA preempts them. See Argos USA LLC v. Young , 2019 WL 4125968, at *12 (N.D. Ga. June 28, 2019) (finding GTSA preemption because "Plaintiff relies on the same factual allegations of misappropriation for its GCSPA, civil conspiracy, conversion, and breach of fiduciary duty claims as its GTSA claim. Specifically, Plaintiff relies on facts that Young used Plaintiff's computer system to misappropriate Plaintiff's proprietary information."); Agilysys, Inc. v. Hall , 258 F. Supp. 3d 1331, 1349 (N.D. Ga. 2017) (GTSA preempted non-GTSA claim because "Plaintiff relies on the same factual allegations of misappropriation for [both claims], namely, that [Defendant] used Plaintiff's computer system without authorization or in excess of his authorization to misappropriate Plaintiff's proprietary information."). Counts 7-9 also allege Defendants impermissibly used Plaintiff's computer system to take other information that Plaintiff declines to characterize as non-trade secrets. By doing so, Plaintiff seeks to avoid the GTSA's exclusivity in remedying the misappropriation of trade secrets by alleging these counts as "lesser and alternative theories" of recovery in case the items are determined not to constitute trade secrets. Robbins , 722 S.E.2d at 58. Or at least, Plaintiff raises the possibility of doing so. GTSA thus also preempts these claims.

But Counts 7–9 also claim Defendants misappropriated information Plaintiff explicitly characterizes as non -trade secrets. Count 2 also exclusively involves Defendants’ alleged misappropriation of proprietary information that does not qualify as trade secrets. GTSA does not preempt these claims because they do not involve trade secrets or the same information as Plaintiff's GTSA claim. That is, unlike in Robbins , where all the claims involved the same drawings, the GTSA and non-GTSA claims in this case involve different information. So, unlike in Robbins , the non-GTSA claims are not simply backup theories that matter only if Plaintiff's GTSA claim fails. They have independent force because they seek relief for the misappropriation of different material.⁵

Defendants counter that "GTSA is the sole remedy [for] the alleged taking of [any ] proprietary or confidential information," even if everyone agrees the information is not a trade secret and even if plaintiff does not assert a...