Guttenberg v. Emery, Civil Action No. 13–2046 JDB

41 F.Supp.3d 61

Dr. Steven A. Guttenberg, et al., Plaintiffs

v.Dr. Robert W. Emery, et al., Defendants.

Civil Action No. 13–2046 JDB

United States District Court, District of Columbia.

Signed May 16, 2014

Geoffrey Paul Gitner, Kerry Brainard Verdi, Martin & Gitner PLLC, Washington, DC, for Plaintiffs.

Angela Donovan Sheehan, Gorman & Williams, Baltimore, MD, Brian L. Schwalb, Moxila A. Upadhyaya, Seth A. Rosenthal, Venable LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

JOHN D. BATES, United States District Judge

This case involves a dispute over alleged breaches of a non-disparagement provision in a settlement agreement between two former business partners. Currently before the Court is [3] defendants' motion to dismiss and [3] defendants' motion for attorney's fees. For the reasons described below, the Court will grant in part and deny in part defendants' motion to dismiss, and will deny defendants' motion for attorney's fees without prejudice.

BACKGROUND

Dr. Guttenberg and Dr. Emery were joint shareholders of an oral surgery practice for about twenty years before their relationship soured. Defs.' Mem. in Supp. of Mot. to Dismiss [ECF No. 3–1] (“Defs.' Mot.”) at 1. Dr. Guttenberg filed a lawsuit against Dr. Emery back in 2008 over some issues that arose during the fallout of their professional relationship, but the parties quickly settled that case. Id. The settlement agreement entered into by Drs. Guttenberg and Emery (the “2008 Settlement Agreement”) contained, among other things, a non-disparagement provision. Id. at 2. That provision, and the alleged breach of that provision, is primarily what this case is about. Plaintiffs, Dr. Guttenberg and his professional corporation, allege that purported violations of the non-disparagement provision by defendants, Dr. Emery and his wife Kathy Borg–Emery, are causing them to lose referral sources and thus prospective clients. See Pls.' Am. Compl. [ECF No. 24] (“Compl.”) ¶¶ 18–20. Plaintiffs also allege that defendants violated the Virginia Business Conspiracy Statute, Virginia State Code Section 18.2–499, and that defendants tortiously interfered with plaintiffs' economic advantage, all through an alleged campaign of disparagement. See id. ¶¶ 30–39.

Plaintiffs initially filed this case in D.C. Superior Court in November 2013, and defendants removed it to this Court in late December 2013. Notice of Removal [ECF No. 1] (“Notice of Removal”). A week later, defendants filed a motion to dismiss. See Defs.' Mot. to Dismiss [ECF No. 3]. Plaintiffs opposed that motion and filed a motion to amend their complaint, which the Court granted. See Mar. 19, 2014 Mem. Op. [ECF No. 22]; Mar. 19, 2014 Order [ECF No. 23]. Some additional briefing ensued, fleshing out previously made arguments or addressing plaintiffs' amended complaint, saving defendants' the trouble of filing a renewed motion to dismiss. See Defs.' Reply in Supp. of Mot. to Dismiss [ECF No. 25]. In their motion, defendants argue that this Court lacks personal jurisdiction over defendant Kathy Borg–Emery and that plaintiffs' complaint fails to state a claim upon which relief may be granted against either defendant. See Defs.' Mot. at 4. Defendants also request attorney's fees. Id.

LEGAL STANDARDS

Under Federal Rule of Civil Procedure 12(b)(2), a plaintiff bears the burden of establishing a court's personal jurisdiction over a defendant. Where, as here, no jurisdictional discovery has taken place, plaintiffs need only make a prima facie showing of the pertinent jurisdictional facts to meet that burden. See Mwani v. bin Laden, 417 F.3d 1, 7 (D.C.Cir.2005) ; Brunson v. Kalil & Co., Inc., 404 F.Supp.2d 221, 226 (D.D.C.2005). “Moreover, to establish a prima facie case, plaintiffs are not limited to evidence that meets the standards of admissibility required by the district court. Rather, they may rest their argument on their pleadings, bolstered by such affidavits and other written materials as they can otherwise obtain.” Mwani, 417 F.3d at 7. Nevertheless, a plaintiff must allege “specific facts upon which personal jurisdiction may be based,” Blumenthal v. Drudge, 992 F.Supp. 44, 53 (D.D.C.1998), and cannot rely on conclusory allegations, see Elemary v. Phillipp Holzmann AG, 533 F.Supp.2d 116, 121 (D.D.C.2008).

To survive a motion to dismiss under Rule 12(b)(6), a complaint need only contain “ ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ ” such that the defendant has “ ‘fair notice of what the ... claim is and the grounds upon which it rests.’ ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ). Although “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6) motion to dismiss, a plaintiff must supply “more than labels and conclusions” or “a formulaic recitation of the elements of a cause of action” to provide the “grounds” of “entitle[ment] to relief.” Twombly, 550 U.S. at 555–56, 127 S.Ct. 1955 ; see also Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). Instead, “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, 677, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ); see also Atherton v. Dist. of Columbia Office of the Mayor, 567 F.3d 672, 681 (D.C.Cir.2009). A complaint is considered plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. This amounts to a “two-pronged approach,” under which a court first identifies the factual allegations that are entitled to an assumption of truth and then determines “whether they plausibly give rise to an entitlement to relief.” Id. at 679, 129 S.Ct. 1937.

“[I]n passing on a motion to dismiss, whether on the ground of lack of jurisdiction over the subject matter or for failure to state a cause of action, the allegations of the complaint should be construed favorably to the pleader.” Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ; see also Leatherman v. Tarrant Cnty. Narcotics Intel. & Coord. Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993). Therefore, the factual allegations must be presumed true, and plaintiffs must be given every favorable inference that reasonably may be drawn from the allegations of fact. See Scheuer, 416 U.S. at 236, 94 S.Ct. 1683 ; Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C.Cir.2000). The Court need not, however, accept as true “a legal conclusion couched as a factual allegation,” nor inferences that are unsupported by the facts set out in the complaint. Trudeau v. FTC, 456 F.3d 178, 193 (D.C.Cir.2006) (quoting Papasan, 478 U.S. at 286, 106 S.Ct. 2932 ).

DISCUSSION

Personal jurisdiction, like subject-matter jurisdiction, “is ‘an essential element of the jurisdiction of a district ... court,’ without which the court is ‘powerless to proceed to an adjudication,’ ” so the Court will address it first. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) (quoting Emp'rs Reins. Corp. v. Bryant, 299 U.S. 374, 382, 57 S.Ct. 273, 81 L.Ed. 289 (1937) ). Then, defendants' arguments as to each claim will be assessed.

I. PERSONAL JURISDICTION

Defendants contend that this Court may not exercise jurisdiction over Kathy Borg–Emery, who resides in Virginia. The Court may exercise personal jurisdiction over a non-resident defendant either by (1) finding general jurisdiction over the defendant, thereby allowing the court to entertain a suit against a defendant “without regard to the claim's relationship vel non to the defendant's forum-linked activity,” or (2) finding specific jurisdiction based on “acts of a defendant that touch and concern the forum.” Steinberg v. Int'l Criminal Police Org., 672 F.2d 927, 928 (D.C.Cir.1981) ; accord Kopff v. Battaglia, 425 F.Supp.2d 76, 81 (D.D.C.2006). Here, it is not necessary to inquire whether this Court could exercise general jurisdiction over Borg–Emery because the Court may exercise specific jurisdiction over her. “A court must first examine whether jurisdiction is applicable under the state's long-arm statute and then determine whether a finding of jurisdiction satisfies the constitutional requirements of due process.” GTE New Media Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1347 (D.C.Cir.2000) (citing United States v. Ferrara, 54 F.3d 825, 828 (D.C.Cir.1995) ). Only one provision of D.C.'s long-arm statute dealing with specific jurisdiction is potentially applicable here: D.C. Code § 13–423(a)(4) provides that

(a) A District of Columbia court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person's:

...

(4) causing tortious injury in the District of Columbia by an act or omission outside the District of Columbia if he regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia.¹

This provision, unlike other provisions in D.C.'s long-arm statute, does not “reach as far as due process permits.” Mwani, 417 F.3d at 9. Put otherwise, if plaintiffs can show that Borg–Emery has the requisite contacts with the District of Columbia, the Court need not engage in the normal due process inquiry, because it is already satisfied: “the Due Process Clause does not demand the level of contacts required by that provision.” Id. ; see also Etchebarne–Bourdin v. Radice, 982 A.2d 752, 762 (D.C.2009) (“[T]he additional activities listed in subsection (a)(4) are ‘plus factors' intended to ensure that there are minimum contacts with...