Francis Trucking Inc. v. Francis

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FRANCIS TRUCKING, INC., a Utah corporation, Plaintiff, v. SHAWN FRANCIS, an individual and SHAWN FRANCIS TRUCKING, INC., a Utah corporation, Defendants.

SHAWN FRANCIS, an individual and SHAWN FRANCIS TRUCKING, INC., a Utah corporation, Counterclaimants and Third-Party Defendants, v. FRANCIS TRUCKING, INC., a Utah corporation, JUSTIN FRANCIS, an individual, SHANE FRANCIS, an individual, and MARSHA FRANCIS, an individual, Counterclaim Defendant and Third-Party Defendants.

No. 1:22-cv-00088-TC-JCB

United States District Court, D. Utah

February 1, 2023

Jared C. Bennett Magistrate Judge

ORDER AND MEMORANDUM DECISION ON PLAINTIFF'S MOTION TO DISMISS DEFENDANTS' COUNTERCLAIMS (ECF NO. 28) AND DEFENDANTS' MOTION TO ADD ADDITIONAL PARTIES (ECF NO 39)

TENA CAMPBELL UNITED STATES DISTRICT JUDGE

There are two pending motions before the court. The first is Plaintiff and Counterclaim Defendant Francis Trucking Inc.'s Motion to Strike and Dismiss Defendants' Counterclaims. ECF No. 28 (Mot. Dismiss). The second is the Provisional Motion of Shawn Francis and Shawn Francis Trucking, Inc. to Add Marsha Francis, Shane Francis, and Justin Francis as Defendants to Various Counterclaims. ECF No. 39 (Mot. Add Additional Parties). The court concludes oral argument on these motions is unnecessary, and issues this ruling after careful consideration of the parties' briefing and relevant legal authorities. For the reasons stated below, the court grants Francis Trucking Inc.'s (FTI) Motion to Dismiss as it relates to the state law counterclaims. It also grants in part and denies in part FTI's Motion to Strike Shawn Francis and Shawn Francis Trucking, Inc.'s (SF Trucking; collectively, “Shawn Francis”) declaratory relief counterclaim. Finally, the court denies Shawn Francis' Motion to Add the Additional Parties.

I. Background.

This case, as framed by FTI, arises out of Shawn Francis' infringement of FTI's service marks. See Compl., ECF No. 2 at ¶ 1.^[1] FTI is a Utah-based transportation and trucking company. Answer & Countercls., ECF No. 16 at ¶ 11 (of Answer). Jack Francis founded FTI in 1993, id., and he died in 2006, id. at ¶ 29 (of Countercls.). Jack^[2] was Shawn's father. Id. at ¶ 11 (of Countercls.). Shawn used to work for FTI. See, e.g., id. at ¶ 30 (of Countercls.). SF Trucking is Shawn's company. Id. at ¶ 24 (of Answer).

FTI has used the following marks, collectively the “Alleged Marks,” in connection with trucking or transportation services: “Francis Trucking,” “Francis Transportation,” “Francis Diesel,” and two logos that include a stylized cattle brand with connected initials “JF” inside a horseshoe. Id. at ¶ 14 (of Answer) (admitting FTI has used these designs, which are listed and described in paragraph 14 of the Complaint). FTI alleges Shawn and his company have been infringing on FTI's service marks by adding “Shawn” or “Shawn Francis” above the FTI mark and then using the resulting design to compete with FTI. Compl., ECF No. 2 at ¶¶ 23-26. FTI says Shawn Francis refuses to cease and desist, even after FTI demanded they stop. See Answer & Countercls., ECF No. 10 at ¶ 11 (of Answer) (admitting FTI purports to demand this). FTI brings three claims against Shawn Francis: (1) a Lanham Act claim for service mark infringement, false designation of origin, false advertising and unfair competition under 15 U.S.C. § 1125(a); (2) a claim for unfair and deceptive trade practices under Utah Code § 13-11a-3; and (3) a Utah common law claim for unfair competition and service mark infringement. Compl., ECF No. 2 at ¶¶ 47-62.

Shawn Francis denies FTI's allegations, and counterclaims against FTI and three individuals: Marsha Francis, Justin Francis, and Shane Francis (these three individuals are the “Additional Parties”). Answer & Countercls., ECF No. 16. Marsha was Jack's wife. Id. at ¶ 29 (of Countercls.). Although neither the Complaint nor the Counterclaims explain Justin or Shane's identities, FTI's Motion to Dismiss reveals that they are Shawn's brothers and Marsha's sons, and that Justin is an FTI employee. Mot. Dismiss, ECF No. 28 at 10. Shawn Francis confirms Justin and Shane are his brothers. Opp. Motion to Dismiss, ECF No. 38 at 5.

About the trademark issue at the heart of the Complaint, Shawn Francis says that beginning in 1995, Jack and FTI knew about, and consented to, Shawn's use of the “Shawn Francis Design.” See Answer & Countercls., ECF No. 16 at ¶¶ 15, 27 (of Countercls.). It includes the stylized cattle brand used by FTI and the name “Francis” with “Shawn” placed above it. Id. at ¶¶13-15 (of Countercls.). Shawn alleges that from 1997 until he was fired from FTI on November 29, 2021, FTI did not complain about the use of the Shawn Francis Design on any of Shawn or his company's trucks, that during that time the Shawn Francis Design came to be associated with Shawn and his company, and that they developed valuable goodwill and rights in that mark. Id. at ¶¶ 38-39 (of Countercls.).

Shawn Francis' counterclaims, and the allegations that support these counterclaims, extend far beyond responding to FTI's trademark claim, and pull a lengthy and contentious family dispute before the court. For example, Shawn alleges not only that his use of the Shawn Francis Design had been ignored by FTI and Jack, but also that a week before Jack's death, Jack asked Shawn to help run part of FTI, and he (Shawn) agreed to do so. Id. at ¶ 29 (of Countercls.). Around that time, Marsha agreed on behalf of herself and FTI to have Shawn work for FTI without retirement contributions, bonuses, or raises, because he would inherit FTI or be allowed to purchase its construction and dirt hauling business at a discount as part of his compensation for helping run and save it. Id. at ¶ 32 (of Countercls.). She also agreed, on behalf of herself and FTI, that while Shawn would be working for FTI, he and SF Trucking would continue with their independent business, with the dump truck at issue in the counterclaims sometimes being used on a “lease” basis to haul loads arranged by FTI. Id. at ¶ 31 (of Countercls.). Shawn worked at FTI under these terms for 15 years. Id. at ¶ 33 (of Countercls.). On November 15, 2021, after extended discussions, Marsha provided him with a written term sheet that would have sold him FTI at a substantial discount, as they had previously agreed. Id. at ¶ 35 (of Countercls.). Shawn signed the term sheet and returned it to Marsha. Id. at ¶ 36 (of Countercls.). Two weeks later, FTI fired him without cause or notice, and Marsha, Justin, and Shane then defamed him and cut him out of FTI's business, unjustly enriching themselves. See id. at ¶¶ 37, 40-43, 77-94 (of Countercls.).

Shawn Francis brings one federal claim and six state law claims against FTI and the Additional Parties. The federal claim is a claim for declaratory relief under 28 U.S.C. § 2201. Id. at ¶¶ 44-48 (of Countercls.). The state law claims are: (1) quiet title to a dump truck under Utah Code Ann. § 78B-6-1301, id. at ¶¶ 49-53 (of Countercls.); (2) defamation, id. at ¶¶ 54-66 (of Countercls.); (3) tortious interference with economic relations, id. at ¶¶ 67-76 (of Countercls.); (4) breach of contract, id. at ¶¶ 77-84 (of Countercls.); (5) unjust enrichment, id. at ¶¶ 85-94 (of Countercls.); and (6) civil conspiracy, id. at ¶¶ 95-100 (of Countercls.).

II. The Court Grants in Part, and Denies in Part, FTI's Motion to Dismiss and Strike.

FTI moves to dismiss Shawn Francis' counterclaims. Mot. Dismiss, ECF No. 28.^[3] It argues the state law counterclaims should be dismissed as the court lacks jurisdiction over them, that the declaratory judgment counterclaim should be stricken as redundant, and that the counterclaims against the Additional Parties are a pleading unrecognized by the rules of civil procedure. Shawn Francis opposes dismissal, arguing that the court has jurisdiction over the state law counterclaims, that the declaratory judgment counterclaim is not wholly redundant, and that the Additional Parties' joinder was procedurally proper. Opp. Mot. Dismiss, ECF No. 38.

a. The Court Dismisses Shawn Francis' Six State Law Counterclaims Without Prejudice.

“[I]f a party alleges a . . . federal claim, a district court obtains subject matter jurisdiction and may, in its discretion, exercise supplemental jurisdiction over related state law claims. Once subject matter jurisdiction exists, a district court has constitutional authority to hear related state claims.” United Int'l Holdings, Inc. v. Wharf (Holdings) Ltd., 210 F.3d 1207, 1222 (10th Cir. 2000), affd, 532 U.S. 588 (2001).

The parties dispute whether the court should exercise supplemental jurisdiction over Shawn Francis' six state law counterclaims.

In deciding whether to exercise supplemental jurisdiction over the state law counterclaims, the court “notes that it is a court of limited jurisdiction and that this limitation is based on ‘important values of federalism and separation of powers.'” Sethunya v. Monson, No. 2:12-CV-454, 2013 WL 65471, at *4 (D. Utah Jan. 4, 2013) (quoting Est. of Harshman v. Jackson Hole Mountain Resort Corp., 379 F.3d 1161, 1164 (10th Cir. 2004)). The court requires constitutional and statutory authority to adjudicate a case. Est. of Harshman, 379 F.3d at 1164. To that end, Congress has provided that,

in any civil action of which the district courts have original jurisdiction, the district courts shall 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). In doing so, Congress was “seeking to vindicate values of economy, convenience fairness, and comity underlying the...