Marketel Media, Inc. v. Mediapotamus, Inc.

MARKETEL MEDIA, INC., SAMUEL T. HASSELL, Plaintiffs, v. MEDIAPOTAMUS, INC., KELLEY J. ORTIZ, Defendants.

KELLEY JENKINS ORTIZ, Plaintiff, v. SAMUEL T. HASSELL, MARKETEL MEDIA, INC.,INTELIMARC, INC., and DOES 1-10, Defendants.

5:13-CV-427-D

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION

May 19, 2015

(No. 5:13-CV-427-D)

(No. 5:13-CV-693-D)

ORDER

On June 13, 2013, Kelly J. Ortiz and Mediapotamus, Inc. ("defendants"), timely removed to this court a North Carolina state-court complaint filed against them by Samuel T. Hassell and Marketel Media, Inc. ("plaintiffs"). See [D.E. 1]. In their complaint, plaintiffs seek declaratory relief and damages for defendants' alleged negligence in maintaining business records and for Ortiz's alleged defamation and slander of Hassell. See [D.E. 1-1] 11-17.

On July 19, 2013, defendants asked the court to transfer the case to the United States DistrictCourt for the Central District of California, where defendants had filed an action against plaintiffs and Intelimarc, Inc. ("Intelimarc"). See [D.E. 12]; Complaint, Ortiz v. Hassell, No. 5:13-cv-730-GHK (C.D. Cal. Apr. 22, 2013), [D.E. 1]. On October 1, 2013, the United States District Court for the Central District of California transferred that action to this court, pursuant to 28 U.S.C. § 1406(a). Letter of Transfer. Ortiz v. Hassell, No. 5:13-cv-730-GHK (C.D. Cal. Oct. 1, 2013), [D.E. 29-1]. On November 8, 2013, this court consolidated the two actions and denied defendants' motion to transfer the case to California [D.E. 20].

On December 23, 2013, the court denied plaintiffs and Intelimarc's motion to dismiss defendants' claims and permitted defendants to amend three claims in their complaint [D.E. 23]. On January 6, 2014, defendants filed a second amended complaint that alleged ten claims. See Second Am. Compl. [D.E. 24]. On October 30, 2014, Hassell and Intelimarc ("movants") moved for summary judgment on defendants' claims against them [D.E. 47] and filed a supporting memorandum [D.E. 50]. On November 20, 2014, defendants responded in opposition [D.E. 55]. On December 4, 2014, movants replied [D.E. 62]. As explained below, the court grants in part and denies in part movants' motion for summary judgment.

I.

Ortiz and Hassell first met in July 2010. Ortiz Decl. [D.E. 55-2] ¶ 2. At that time, Hassell worked for Salem Radio Representatives ("Salem"). Hassell Dep. [D.E. 47-2] 11 (deposition pages 34-36). Ortiz was the sole-shareholder and president of Mediapotamus, Inc. ("Mediapotamus"), a company that focused on "per inquiry" radio advertising. Ortiz Dep. [D.E. 47-3] 9-10 (deposition pages 29-32); Ortiz Decl. [D.E. 55-2] ¶ 1. Ortiz and Hassell worked together and developed a "good working relationship." Ortiz Dep. 120. While working for Salem, Hassell did advertising and marketing work for Dan Weber, the founder of the Association of Mature American Citizens("AMAC"). Hassell Dep. 36-37, 103. In the spring of 2011, Hassell approached Ortiz about apian for one of Hassell's companies, Conservative Retired People ("CRP"), to buy AMAC, and the possibility of Ortiz being on CRP's board of advisors. Ortiz Dep. 120-21.

In May or June of 2011, Hassell became CEO of AMAC. Hassell Dep. 36-37. As part of Hassell's compensation package, AMAC agreed to allow Hassell to handle, and thereby earn commissions from, AMAC's advertising. Id. 41. Around the same time, Hassell and Ortiz began discussing the formation of a new company, Marketel Media ("Marketel"). Ortiz Decl. ¶ 2; Hassell Dep. 42-43. Hassell wanted Ortiz to "grow [Marketel's] business by bringing in clients. . . . help with the admin and to be the face of Marketel." Hassell Dep. 45, 51; Ortiz Decl. ¶ 2; Ortiz Dep. 123 ("[Hassell] had left Salem to become the CEO of AMAC. And part of his compensation was getting to handle AMAC advertising, but since he was the CEO of AMAC, he needed another company and specifically someone else to be the face of it, so it didn't look too bad.").

On June 7, 2011, Hassell sent Ortiz an Agreement for Ownership of Marketel Media ("Marketel Ownership Agreement"), which she "immediately signed and returned." Ortiz Decl. ¶ 3; [D.E. 55-7]; [D.E. 55-3] 2 (KJO 1). Hassell told Ortiz that there would be a "50/50 split" in the division of shares. See [D.E. 55-3] 2 (KJO 1). The agreement reflected this split. See [D.E. 55-7] 4 (KJO 4).

On June 26, 2011, Hassell, in his role as AMAC's CEO, sent an email in which he referred to "Kelly Ortiz with Marketel Media" as "the lead agency." See [D.E. 55-3] 10 (KJO 256). Hassell also noted that Ortiz would be the "main contact for Amac." Id.; Ortiz Decl. ¶ 6.

On July 6, 2011, Hassell filed Marketel's incorporation papers with the North Carolina Secretary of State. See [D.E. 47-6] 14-16 (MRK 773-75). Hassell was listed as the sole incorporator. Id.

The parties dispute the nature of Marketer s organization and compensation structure. According to Hassell, Marketel was an "umbrella" organization through which various associated entities pooled resources and provided advertising services. See Hassell Decl. [D.E. 47-6] ¶¶ 7-12. Hassell contends that "[n]either one of [he or Ortiz] ever worked for Marketel. That's the whole model." Hassell Dep. 52. Instead, Ortiz's and Hassell's relationships with Marketel went through their respective companies, including Mediapotamus. See id. 52-57. Furthermore, according to Hassell, the purpose of Marketel was to make money for the associated entities, rather than for Marketel itself. Id. 69-70. Marketel would receive a commission on media buys that it purchased for its clients. Id. 73. After paying for certain operating expenses, the remainder of the commission would go to the "associate entity" that brought in the client. Id. 129. That entity would then, in turn, pay other associate entities for work done for that client. Id. Thus, according to Hassell, the associated entities, and not Marketel, made profits by being compensated by Marketel for work done for Marketel's clients. Id. 69-75. Moreover, there was no "strict compensation plan" for the administrative work that Ortiz—through Mediapotamus, in Hassell's view—did. Id. 72. Hassell also asserts that the Marketel Ownership Agreement "does not address in any way how [Hassell's and Ortiz's] respective entities under the Marketel compensation model would be compensated for services rendered to, for, or on behalf of Marketel." Hassell Decl. ¶ 15.

Ortiz describes Marketel as a "traditional advertising agency featuring pay-in-advance or pay for air time advertising." Ortiz Decl. ¶ 7. According to Ortiz, Mediapotamus never had a business relationship with Marketel. Id. ¶ 16. Ortiz disputes that Marketel was an "umbrella" brand, and she asserts that "[a]ll of Marketel's business was directly with its clients." Id. ¶ 22. Ortiz alleges that her 50% ownership of Marketel entitled her to 50% of Marketel's profits and that she worked "full time for Marketel." Id. ¶ 11. Ortiz claims that her role at Marketel was "to place all the advertising,manage the existing campaigns, invoice and collect from [the] clients, pay [the] vendors, pay [the] operating expenses, and distribute the profits equally to Hassell and [Ortiz]." Id. ¶ 9; see Ortiz Dep. 108-09. Hassell's role was "to engage in client relations and obtain new clients." Ortiz Decl. ¶ 10.¹

When Marketel was formed, AMAC was its only client. Ortiz Dep. 123. Ortiz and Hassell split equally the net proceeds from Marketel's commissions from its AMAC work. Hassell Decl. ¶¶ 13-14; Hassell Dep. 91-92. Ortiz offered to bring Mediapotamus's per-inquiry advertising business to Marketel, but, after further discussion, she and Hassell decided that the per-inquiry business was "not lucrative enough for Marketel to do" and did not fit within Marketel's traditional advertising services. Ortiz Decl. ¶ 17; Ortiz Dep. 166-67; Hassell Decl. ¶ 11.

In late 2011, Hassell began talking with Winning Our Future ("WOF"), a super PAC that supported then-GOP presidential candidate Newt Gingrich. Hassell Dep. 103-04; Ortiz Decl. ¶ 8. On December 7, 2011, Hassell sent Ortiz an email in which he noted that he was "meeting with Newt's people in a few minutes." [D.E. 55-3] 31. Around the same time, Hassell formed Intelimarc, of which he was the sole employee. Hassell Dep. 104-05. On or about December 13, 2011, Intelimarc signed an "Agency of Record" agreement with WOF. See [D.E. 47-5] 5-7. Hassell asserts that he had Intelimarc, rather than Marketel, sign an agreement with WOF because, among "a variety of reasons," "Marketel Media was not in the business of consulting with political organizations, strategy development for political campaigns, the donor development stuff." Hassell Dep. 105-06. Ortiz asserts, however, that Hassell represented Marketel during his meetings withWOF. Ortiz Decl. ¶ 26.

On December 14, 2011, Hassell emailed Ortiz and Christina Bledsoe, an AMAC employee, he noted a client, "Winning Our Freedom," and said that the agency of record was Intelimarc. [D.E. 47-5] 9-10 (KJO 648-49). He also listed Marketel and Strategic Media, Inc., as "Buying Agencies for Intelimarc, Inc." Id. Ortiz denies seeing this email and argues, in the alternative, that "[e]ven if Hassell did send it, it would have been such a new and prospective project, that it would not have caught [her] eye while it was yet another 'potential new client' and one of hundreds of emails [she] received each day." Ortiz Decl. ¶ 26.

Hassell alleges that he had daily communication with Ortiz about Marketel and that he "informed [Ortiz] that Intelimarc would be the agency [of] record for Winning Our Future and that it would contract out certain work to Marketel." Hassell Decl. ¶ 17; see Hassell Dep. 112-113. Hassell further claims that Marketel paid a commission to Intelimarc for some WOF work but that WOF paid Intelimarc directly for "all work outside of the traditional advertising services." Hassell Decl. ¶¶ 18-19. Ortiz...