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Martin v. Hellmich

United States District Court, N.D. New York

March 10, 2016

JAMES W. MARTIN, Individually and as Owner of Mastiff Contracting, LLC, Plaintiff,
v.
CHRISTOPHER W. HELLMICH; and MASTIFF CONTRACTING, LLC, Defendants.

          JAMES W. MARTIN Plaintiff, Pro Se

          CHRISTOPHER W. HELLMICH Defendant, Pro Se

          DECISION AND ORDER

          Glenn T. Suddaby, Chief United States District Judge

         Currently before the Court, in this pro se copyright infringement action filed by James W. Martin, individually and as owner of Mastiff Contracting, LLC ("Plaintiff") against Christopher W. Hellmich ("Hellmich") and Mastiff Contracting, LLC ("Mastiff"), is Hellmich's motion to dismiss Plaintiff's Complaint, based on the doctrine of res judicata, pursuant to Fed.R.Civ.P. 12(b)(6), or, in the alternative, to transfer venue of this action to the United States District Court for the Central District of California pursuant to 18 U.S.C. § 1404(a). (Dkt. No. 51.) For the reasons set forth below, Hellmich's motion to dismiss is granted.

         I. RELEVANT BACKGROUND

         A. Plaintiff's Verified Complaint

         Generally, Plaintiff's Verified Complaint alleges as follows. (Dkt. No. 1, Attach. 1 [Plf.'s Verified Compl.].) In 2009, Plaintiff, a New York resident, formed Mastiff, a New York corporation, to "engage in [the] business of creating, funding, [and] financing clean energy derived from the mechanisms and/or resources of [Plaintiff]." (Id. at ¶¶ 1-2, 5.) At some unspecified point in time, Hellmich, an attorney residing in California, was "introduced to Plaintiff, [his] agents, servants, and/or employees, " and agreed to become a one-percent shareholder in Mastiff "for services rendered." (Id. at ¶¶ 3, 6-8.) As a result Hellmich assumed an obligation "to engage in fiduciary acts to protect" Mastiff, Plaintiff, and George Holley, Jr. ("Holley, " whose identity is otherwise unclear from Plaintiff's Verified Complaint). (Id. at ¶ 8.)

         At some (again, unspecified) point in time, Hellmich, in violation of his fiduciary duties to Mastiff and its shareholders, as well as "the obligation to bring any dispute resolution in the State of New York, " commenced an arbitration proceeding in California. (Id. at ¶¶ 10-11.) Moreover, Hellmich "has used or has attempted to use the copy right and/or information or knowledge of the process to be marketed [and] created by [Plaintiff] to his own benefit" and has "upon information and belief . . . attempted to sell the product, a portion of Mastiff . . . and the technology." (Id. at ¶ 13.) The subject of the arbitration proceeding (as well as the source of Hellmich's "obligation" to bring it in New York State) is not clear from Plaintiff's Verified Complaint, nor is it clear whether Hellmich engaged in these acts before, after, or during the arbitration proceeding.

         Based upon these factual allegations, Plaintiff appears to assert the following claims: (1) a claim for copyright infringement; (2) a claim for injunctive and declaratory relief, specifically, an order directing "Defendants . . . to cease and dismiss any action in any court, tribunal or arbitration outside the State of New York, " and a declaratory judgment that any dispute resolution must be held in New York State Supreme Court, Fulton County; and (3) a claim that Hellmich breached his fiduciary obligations to Plaintiff, Mastiff, and "Plaintiff Holley" (who is not actually a party to this lawsuit). (Id. at ¶¶ 12-20.)[1]

         B. Parties' Briefing on Hellmich's Motion to Dismiss

         1. Hellmich's Submissions in Support of His Motion

         a. Hellmich's Memorandum of Law

         Generally, in support of his motion to dismiss, Hellmich argues as follows: (1) Plaintiff's Verified Complaint must be dismissed pursuant to the doctrine of res judicata because (a) in a prior action, the United States District Court for the Central District Court of California, Southern Division, confirmed three arbitration awards against Martin (as well as respondents Mastiff, Holley, and Chelsey Stead Martin ["Stead Martin"]) and in favor of Hellmich, resulting in an adjudication on the merits, (b) the California action involved the same parties as the present action, and (c) in opposing confirmation of the third arbitration award, Plaintiff "practically reiterated verbatim the claims" he asserts in this action, and, as a result, "actually litigated" the same claims in the California action; (2) alternatively, the Court should transfer this case to the United States District Court for the Central District Court of California, Southern Division, because (a) at the time this case was commenced, Hellmich resided (and still resides) within the Central District of California, and (b) the location of relevant documents, locus of operative facts, and convenience of witnesses weigh in favor of setting venue in California, given that (i) Plaintiff and Mastiff "routinely entered California to raise capital" to fund Mastiff's development, (ii) a "one-third principal owner and corporate officer" of Mastiff resides in Los Angeles, California, (iii) Plaintiff hired a California resident to serve as Mastiff's chairman of the board, (iv) Plaintiff sold equity to Hellmich and entered into a loan with another resident of Orange County, California, (v) Plaintiff's "principal investment banker" raising capital for Mastiff resides in Los Angeles, California, and (vi) the arbitration agreement between the parties states that it is governed by California law; and (3) the Court should award attorneys' fees and costs to Hellmich because California law requires the award of such fees and costs against a non-signatory to an arbitration agreement where the plaintiff (i.e., Hellmich in the California action) establishes alter ego liability of a non-signatory, as Hellmich has in proceedings that have been held between the parties in California. (Dkt. No. 51, Attach. 1, at 3-8 [Hellmich's Memo. of Law].)

         b. Submissions Related to Proceedings in California

         With his memorandum of law, Hellmich filed numerous exhibits related to the proceedings in California, and the following information is derived from those documents and proceedings.

         i. Loan Agreement

         Hellmich and Mastiff (by Martin, its chief executive officer) entered into a "Promissory Note and Equity Agreement" ("Loan Agreement"), dated September 27, 2013, pursuant to which Mastiff promised to repay Hellmich $50, 000, representing loan proceeds from Hellmich. (Dkt. No. 51, Attach. 2 [Loan Agreement].) The Loan Agreement provides that "[a]ny and all disputes arising from or related to this Agreement, or the relationship of the Parties . . . shall be resolved by arbitration conducted in Orange County, California in accordance with the Commercial Arbitration Rules of the American Arbitration Association . . . ." (Id. at 2 [emphasis added].) Moreover, the Loan Agreement provides that it "shall be governed by, and construed according to, the laws of the State of California, and the legal venue shall be Orange County, California." (Id.) See also Hellmich v. Mastiff Contracting, LLC, 14-CV-1354, 2015 WL 391989, at *1 (C.D. Cal. Jan. 27, 2015) (quoting the Loan Agreement). Thereafter, Hellmich made (at least) three more loans to Mastiff. Hellmich, 2015 WL 391989, at *2.

         ii. Hellmich's Demand for Arbitration and First Arbitral Award

         On July 9, 2014, Hellmich filed a demand for arbitration against Mastiff, Martin, and Holley, asserting five claims: (1) a claim for breach of contract against Mastiff (based on a failure to repay loans to Hellmich, including the loan pursuant to the Loan Agreement, totaling over $130, 000); (2) a claim for declaratory relief against Mastiff; (3) a claim for Martin's violation of California's Unfair Competition Law against Mastiff; (4) a claim for fraud against Mastiff, Martin, and Holley, based on their "misrepresentations that Mastiff solely owned all of the intellectual property and their material omission of the fact that they never intended to agree to any investment that was not tied to" a transaction with David Maxwell, a "purported banker" who "claimed access to secret sources of money . . ."; and (5) a claim for an accounting. Hellmich, 2015 WL 391989 at *2. In August 2014, an arbitrator held a telephonic hearing and, thereafter, issued the first arbitral award in the case, a temporary restraining order pursuant to American Arbitration Association ("AAA") Rule 38. (Dkt. No. 51, Attach. 4 [Notice of Ruling and Order, dated 9/28/2014].) The first arbitral award, inter alia, ordered Mastiff and its owners, officers, directors, and employees to cease all commercial, monetary, banking, or securities transactions involving Maxwell, restrained Martin and Holley from exercising any managerial control over Mastiff, and permitted Martin to use Mastiff funds for the sole purpose of retaining counsel for Mastiff. (Dkt. No. 51, Attach. 4 [Notice of Ruling and Order, dated 9/28/2014].) See also Hellmich, 2015 WL 391989 at *3.

         iii. Second Arbitral Award

         In September 2014, Hellmich filed a motion for a prejudgment writ of attachment, and, following telephonic hearings held in September and October 2014, the arbitrator issued the second arbitral award in the case, granting Hellmich's motion. (Dkt. No. 51, Attach. 5 [Right to Attach Order].) See also Hellmich, 2015 WL 391989 at *3-4. The second arbitral award authorized Hellmich to, among other things, (1) "attach, levy, and otherwise secure" respondents' property up to the value of $730, 992.50 and (2) serve the order on "the proper authorities at the United States Patent and Trademark Office and/or the United States Copyright Office, " and to attach any property belonging to Mastiff or Martin thereat. (Dkt. No. 51, Attach. 5, at ¶¶ 15-16, 19.) See also Hellmich, 2015 WL 391989 at *3. Moreover, the arbitrator concluded that he had jurisdiction over Martin and Holley in light of the "expansive provision in the parties['] arbitration agreement, " which "conveyed to . . . the arbitrator . . . the power to resolve all disputes related to the 'relationship of the parties, '" as well as the fact that "The Supreme Court and the Ninth Circuit have interpreted this terminology to encompass all disputes without exception." (Dkt. No. 51, Attach. 5, at ¶ 17.) See also Hellmich, 2015 WL 391989 at *4. The arbitrator also concluded that Martin and Holley were subject to the orders of th[e] arbitral [t]ribunal because . . . they have participated in the arbitration and failed to object to this [t]ribunal exercising jurisdiction over them . . . ." (Dkt. No. 51, Attach. 5, at ¶ 18.)

         iv. Confirmation of First Two Arbitral Awards

         On January 27, 2015, the United States District Court for the Central District of California confirmed the first two arbitral awards. Hellmich, 2015 WL 391989 at *5-7. In so doing, the Central District Court found that (1) Mastiff was a party to the Loan Agreement and Hellmich's claims were encompassed by the Loan Agreement's provision that it covers "[a]ny and all disputes arising from or related to this Agreement or the relationship of the parties, " and (2) because Martin and Holley were both agents of Mastiff (based on Martin's execution the Loan Agreement as Mastiff's chief executive officer, as well as evidence adduced by Hellmich concerning Holley's role with Mastiff), they were "bound to the arbitration clause of the Loan Agreement[.]" Id. at *6-7. As a result, the Central District Court concluded that requiring Hellmich to pursue his claims (including his fraud claim) in court would "defeat [his] contractual right to arbitrate [his] claims against Mastiff, " particularly in light of the fact that his claims concerned the "misleading statements and omissions that fraudulently induced" him to enter into the Loan Agreement in the first instance. Hellmich, 2015 WL 391989 at *7-8. Finally, the Central District Court concluded that Hellmich had made "detailed allegations" and "provided some documentary evidence that Holley, Martin, and Stead Martin have treated Mastiff's funds as their own, comingled Mastiff's funds with their personal funds, secretly diverted Mastiff's funds, failed to maintain an arm's length relationship between themselves and Mastiff, and failed to maintain corporate records." Id. at *8. Holley, Martin, and Stead Martin did not "object[] to [Hellmich's] evidence, nor [did] they respond[] with their own evidence ...


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