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Camick v. Holladay

United States District Court, D. Kansas

March 27, 2018

HARRY R. HOLLADAY, ESQ., et al., Defendants.



         Plaintiff Leslie Lyle Camick asserts six claims against Defendants Harry Holladay, Evelyn A. Wattley, and KaiTraxx, LLC. There are numerous motions pending in this case, but most of these motions are moot. The relevant motion is Defendants' Motion to Dismiss Plaintiff's First Amended Complaint. In this motion, Defendants seek dismissal of Plaintiff's claims on the basis that Plaintiff does not state a claim and that Plaintiff's claims are barred by the statute of limitations. Because Plaintiff's claims are barred by the statute of limitations or he does not state a claim, the Court grants Defendants' motion and denies all of the remaining motions as moot.

         I. Factual and Procedural Background[1]

         Plaintiff originally filed his Complaint on May 15, 2017, asserting four claims against three Defendants.[2] These Defendants include Harry Holladay, KiaTraxx LLC (“KaiTraxx”), and Evelyn Wattley. Wattley (a resident of Kansas) is the owner of KaiTraxx (a Louisiana limited liability corporation). Holladay is an attorney who practices law in Louisiana and Texas and is a close relative of Wattley.

         Plaintiff sought to proceed in forma pauperis, and the Court granted Plaintiff's request on July 11, 2017. On that same date, the Court directed the clerk of the court to take the appropriate steps to serve Defendants. On July 25, 2017, the summons were returned executed. On August 7, 2017, counsel entered an appearance on behalf of KiaTraxx and Wattley. On that same date, these Defendants filed a Motion to Dismiss (Doc. 14).[3]

         On August 21, 2017, Plaintiff filed a Motion for Default Judgment against Defendant Holladay. Obtaining a default judgment under Fed.R.Civ.P. 55 is a two-step process, and Plaintiff had not completed the first step-filing an application for clerk's entry of default. Thus, the Court construed Plaintiff's motion for default judgment as an application for clerk's entry of default. In the Court's review of the docket, it appeared that Defendant Holladay was served with process and had not timely answered. Thus, a clerk's entry of default was entered against him on August 22, 2017.

         That same day, Plaintiff filed an additional Motion for Default Judgment (Doc. 25). The next day, Defendant Holladay filed a Motion to Set Aside the Clerk's Entry of Default and a Motion for Leave to Respond to the Complaint (Doc. 26). In this motion, Defendant Holladay asserts that he was not properly served with process and that good cause exists to set aside the clerk's entry of default.[4]

         On August 27, 2017, Plaintiff filed a Motion to Amend Complaint. No. response was filed to Plaintiff's motion, and the Court granted Plaintiff leave to file an amended complaint on December 11, 2017. Plaintiff filed his First Amended Complaint on December 12. In his 62-page Amended Complaint, he asserts six claims. These claims include: (1) violation of the Defend Trade Secrets Act (“DTSA”), (2) violation of the Kansas Uniform Trade Secrets Act (“KUTSA”), (3) tortious interference with prospective business relationship, (4) breach of fiduciary duty (against Defendant Holladay alone), (5) violation of the Racketeer Influenced Corrupt Organizations (“RICO”) Act, and (6) breach of contract (against Defendant Wattley alone).

         In this Amended Complaint, Plaintiff asserts that he is a telecommunications field engineer and a published inventor with contributions to the telecommunications field. He has developed several inventions. These include a cable protector, secure manhole system (“manhole security cover”), pole line hardware (“pole crab”), and a squirrel guard for aerial fiber optic and copper cables.

         Defendant Wattley and Plaintiff were involved in a romantic relationship, beginning in 2005. They lived together for almost six years. In 2007, they formed a business relationship operating as KaiTraxx. Wattley was listed as the owner, allegedly so they would qualify as a women-minority owned business. Wattley was the President and CEO, and Plaintiff acted as Director of International Operations of KaiTraxx. Holladay acted as legal advisor to Wattley. Plaintiff and Wattley agreed to share equally in the profit, but Plaintiff alleges that he told Wattley that he would never assign any of his patents, trade secrets or inventions to the company.

         KaiTraxx conducted annual meetings in January 2007 through 2011. At each of these meetings, Wattley recorded a statement that Plaintiff assigned his rights to his patents to KaiTraxx. Plaintiff states that no assignment was ever agreed to by him and that there is not a signed record of the assignment. Plaintiff states that he did verbally agree to assign installation rights on one of his inventions, the hazaguard cable protections apparatus. Plaintiff claims that Wattley, Holladay, and KaiTraxx were beneficiaries of Plaintiff's professional activities from January 2007 through September 2011.

         In early 2010, Plaintiff constructed the manhole security cover. He made a prototype by late April 2010. Plaintiff, with Wattley present, demonstrated the prototype manhole security system in April 2010 in California to AT&T. In the summer of 2010, Wattley entered Plaintiff's information regarding the prototype (technical data and manual) into a word document. Plaintiff calls this document the “Power Life Lock Manhole Security System.”

         In July 2011, significant issues developed between Plaintiff and Wattley. On July 9, 2011, Plaintiff refused to allow corporate payroll funds to be used to post bail for Wattley's son. Plaintiff's and Wattley's relationship was terminated. On July 23, 2011, Wattley called New Mexico police to falsely report that Plaintiff had stolen his own personal vehicle. Plaintiff was placed under arrest and the vehicle was impounded. On July 27 or 28, 2011, Wattley retrieved the vehicle and allegedly took, without authorization, personal telecommunications equipment, the Power Life Lock Manhole Security System document, and the prototype invention of the “pole crab.” Plaintiff requested return of these items in October 2011, but Wattley allegedly refused to do so.

         Plaintiff was arrested three times over a two-year period (in New Mexico, New Jersey, and Kansas) because Wattley reported that her vehicle was stolen (that was purportedly Plaintiff's own vehicle). Plaintiff also asserts that Wattley caused Plaintiff to be arrested and convicted of a felony in federal court and removed from the United States.[5] Plaintiff states that Holladay acquiesced in Wattley's unlawful actions. Plaintiff has been under court order to not communicate with Wattley since March 28, 2013.

         With regard to his specific legal claims, he claims that Holladay, Wattley and KaiTraxx violated the DTSA (18 U.S.C. § 1836) and the KUTSA (K.S.A. § 60-3322). He claims that Wattley, on her own or through KaiTraxx, and with full knowledge of Holladay, acquired through unlawful means Plaintiff's trade secret information relating to the manhole security cover and the pole crab. Plaintiff also alleges that Wattley, KaiTraxx, and Holladay tortiously interfered with his prospective business relationship with AT&T regarding the installation of the manhole cover. He claims that Wattley created uncertainty with AT&T when she attempted to invoice AT&T for Plaintiff's work when Plaintiff had already told AT&T that he would cover the costs. He states that Wattley's interference caused him to lose his business expectancy.

         Plaintiff brings a breach of fiduciary duty claim solely against Holladay. In this claim, he asserts that Plaintiff relied upon Holladay to provide accurate legal advice to Wattley. He claims that he suffered third party injury because Holladay breached his fiduciary duty to Wattley when Holladay did not properly advise her against unlawful and unethical conduct.

         In addition, Plaintiff brings a claim for violation of the RICO Act. He claims that Defendants conspired to defraud Plaintiff of his assets by wire or mail fraud. He claims that the KaiTraxx minutes between 2007 and 2010 fraudulently state that Wattley had a claim to Plaintiff's intellectual property. Plaintiff also alleges that Wattley knowingly transported trade secrets across state lines and that Holladay acquiesced in this unlawful conduct. He also states that Wattley displayed a pattern of continuing fraudulent conduct in attempting to wrongly incriminate Plaintiff to have him removed from the country.

         Finally, Plaintiff brings a breach of contract claim solely against Wattley. He claims she breached her contract with Plaintiff by wrongly claiming that he assigned patent rights to her company, KaiTraxx. Plaintiff also asserts that Wattley breached her contract with him when on November 15, 2011, Wattley quieted title of their home in her name.

         Defendants have now filed a Motion to Dismiss Plaintiff's First Amended Complaint (Doc. 42).[6] They claim that Plaintiff fails to state a claim and that his claims are barred by the statute of limitations. The Court will primarily discuss this motion. In all, however, there are nine pending motions before the Court. As will be noted below, eight of the motions are moot.

         II. Discussion

         A. Motions Related to Plaintiff's First Complaint (Docs. 14, 21, 25, 26, 27, 39)

         Six motions in this case relate to Plaintiff's first complaint. These include (1) Defendants' Motion to Dismiss and Motion for Attorney Fees (Doc. 14), (2) Plaintiff's Motion to Strike Portions of Defendants' Reply (Doc. 21), (3) Plaintiff's Motion for Default Judgment and Motion for Hearing (Doc. 25), (4) Defendant Holladay's Motion to Set Aside Clerk's Entry of Default and Motion for Leave to Respond to the Complaint (Doc. 26), (5) Plaintiff's Motion to Strike Defendant Holladay's Motion to Set Aside (Doc. 27), and (6) Plaintiff's Motion to Strike Supplement to the Record (Doc. 39). On December 12, 2017, Plaintiff filed a First Amended Complaint. Thus, on this date, the Amended Complaint became the operative pleading in this case.[7] The clerk's entry of default and the above motions are all directed toward the first complaint, which is now a moot and inoperative pleading.[8] Thus, the clerk's entry of default must be set aside and the above motions denied as moot.[9]

         B. Defendants' Motion to Dismiss (Doc. 42)

         1. Legal Standard

         Under Rule 12(b)(6), a defendant may move for dismissal of any claim where the plaintiff has failed to state a claim upon which relief can be granted. On such motion, the court must decide “whether the complaint contains ‘enough facts to state a claim to relief that is plausible on its face.' ”[10] A claim is facially plausible if the plaintiff pleads facts sufficient for the court to reasonably infer that the defendant is liable for the alleged misconduct.[11] The plausibility standard reflects the requirement in Rule 8 that pleadings provide defendants with fair notice of the nature of claims as well as the grounds on which each claim rests.[12] Under Rule 12(b)(6), the court must accept as true all factual allegations in the complaint but need not afford such a presumption to legal conclusions.[13] If the allegations in the complaint are “so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs ‘have not nudged their claims across the line from conceivable to plausible.' ”[14]

         Generally, the Court is constrained by the allegations in the complaint when considering a motion to dismiss. A court, however, may take facts subject to judicial notice, such as “its own files and records, as well as facts which are a matter of public record” without converting a motion to dismiss to one for summary judgment.[15] Furthermore, “a document central to the plaintiff's claim and referred to in the complaint may be considered in resolving a motion to dismiss, at least where the document's authenticity is not in dispute.”[16]

         Because Plaintiff is pro se, the Court is mindful of considerations for an unrepresented plaintiff. “A pro se litigant's pleadings are to be construed liberally and held to a less stringent standard than formal pleadings drafted by lawyers, ” but the Court will not “assume the role of advocate for the pro se litigant.”[17] To avoid dismissal, the pro se complaint “must set forth the grounds of plaintiff's entitlement to relief through more than labels, conclusions and a formulaic recitation of the elements of a cause of action . . . [and] must allege sufficient facts to state a claim which is plausible-rather than merely conceivable-on its face.”[18]

         2. Analysis

         a. Count I - Violation of the DTSA

         Defendants assert that Plaintiff fails to state a claim under the DTSA. The DTSA provides for a private cause of action for “[a]n owner of a trade secret that is misappropriated . . . if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.”[19] Misappropriation means “(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (B) disclosure or use of a trade secret of another without express or implied consent by a person . . . .”[20]Thus, there are three avenues for liability: (1) acquisition, (2) disclosure, or (3) use.[21] The DTSA only applies to misappropriations occurring after its enactment on May 11, 2016.[22]

         Defendants assert that Plaintiff fails to state a claim because he does not allege an act of misappropriation after enactment of DTSA. Plaintiff contends that his allegations of continuing possession of his trade secrets constitutes a misappropriation.

         Plaintiff identifies his trade secrets as the manual for the manhole cover (Power Life Lock Manhole Security System) and the prototype of the pole-crab. The majority of Plaintiff's allegations relate to conduct or acts that occurred in 2010 or 2011. He states that the unlawful acts originated in 2007 and culminated in the violation of Plaintiff's trade secrets rights in 2011. Specifically, he alleges that Wattley removed his trade secrets from a vehicle on or about July 28, 2011, in New Mexico.

         Plaintiff's allegation of the “acquisition” of trade secrets clearly occurred prior to the DTSA's enactment. Indeed, as it occurred in late July 2011, and the DTSA was enacted in May 2016, the acquisition was almost five years prior to enactment. As noted above, the DTSA only applies to misappropriations occurring after the DTSA's enactment. Thus, Plaintiff's allegation of misappropriation related to acquisition fails to state a claim under the DTSA.

         Plaintiff argues, however, that Wattley continues in unauthorized possession of his trade secrets, and thus he states that he has alleged a misappropriation after the DTSA's enactment. Continuing possession, however, is insufficient to state a claim.[23] Instead, there must be allegations of use or disclosure after the DTSA's enactment. As noted above, Plaintiff's specific dates, acts, and timing relate to events that occurred during the summer of 2011. Plaintiff does not allege any acts of acquisition, disclosure, or use occurring after May 11, 2016. He simply alleges “continuing possession.” Even if he did allege “use, ” he simply asserts conclusions. The ...

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