MOUNT

v.

AMERICA'S INSURED, LLC

Parsons Counterclaims (Doc. 54 (the “Second Motion to Dismiss”)) and Counter-Plaintiff Parson’s response (Doc. 56). Upon due consideration, all four motions are granted in part and denied in part.

I. BACKGROUND

This case stems from business relationships gone sour and an ensuing trademark dispute regarding the “America’s Insured” trademark (the “Contested Mark”). (Docs. 1, 23, 47). Counter-Defendant registered the Contested Mark with the United States Patent and Trademark Office with U.S. Trademark Registration No. 6,759, 316 on June 14, 2022. (Doc. 1, ¶¶ 1, 2). However, the Counter-Defendant alleges the Contested Mark was first in use in connection with the sale of insurance agency and brokerage services dating back to at least January of 2000. (Id. ¶¶ 2, 11–12). Nevertheless, the Counter-Defendant alleges that since around June¹, 2020, the Counter-Plaintiffs have engaged in a pattern of behavior aimed at capitalizing on the Contested Mark’s reputation, good will, and its associated customer base by misleading customers into purchasing their identical and competing insurance services. (Id. ¶ 3). More specifically, this allegedly illegal behavior arose due to the fallout from the sale on June¹, 2020 of America’s Insured, LLC (herein referred to as Counter- Plaintiff AI, LLC), an entity created in 2018 by non-party Brent Argusa (“Non- Party Argusa”) allegedly at the behest of Counter-Defendant. (Id. ¶¶ 16, 18–21). At the time of the entity’s creation, Counter-Defendant allegedly agreed to revocably license the Contested Mark and its related design to Counter-Plaintiff AI LLC. (Id. ¶¶ 16, 22–24). After Non-Party Argusa stepped away as managing member of Counter-Plaintiff AI LLC in April of 2020, Counter-Defendant began discussions with Counter-Plaintiffs Parsons and Allenger to take on this role. (Id. ¶¶ 25–27). Non-Party Argusa then orally agreed to transfer controlling ownership stakes in Counter-Plaintiff AI LLC on June¹, 2020. (Id. ¶ 28). The contested terms of this transfer and the fallout from it make up the bulk of this dispute: Counter- Defendant alleges he was supposed to at some point receive a controlling interest in the entity after the initial transfer while Counter-Plaintiffs Allenger and Parsons aver this was never their understanding. (Compare Doc¹ with Doc. 23 and Doc. 47). Put simply, in Counter-Defendant’s view Counter-Plaintiffs did not live to their end of the bargain and thus improperly began to utilize the Contested Mark, even after Counter-Defendant revoked the oral license for its use by Counter- Plaintiff AI LLC. (Id. ¶¶ 28–50). In order to remedy these alleged wrongs, the Counter-Defendant filed the initial Complaint alleging the following claims: unfair competition (Count I),

trademark infringement (Count II), false designation of origin (Count III), trademark counterfeiting (Count IV), and cybersquatting (Count V). (Id. ¶¶ 51– 99). The Counter-Plaintiffs answered, asserted forty affirmative defenses, and brought three counterclaims: non-infringement (Count I), trademark invalidity (Count II), and trademark cancellation (Count III). (Docs. 23, 47).1 Therein, Counter-Plaintiffs allege it was never their understanding that Counter-Defendant ever held any ownership interest in either Counter-Defendant AI LLC or in the Contested Mark or that they would be required to transfer any such related interests after the June¹, 2020 sale. (Doc. 23, ¶¶ 103–06; Doc. 47, ¶¶ 103–06). The Counter-Defendant now moves to strike the affirmative defenses and dismiss the three counterclaims. (Docs. 32, 33, 54, 55). After the Counter-

Plaintiffs’ responses in opposition (Docs. 43, 50, 56, 57), this matter is ripe for review.

II. STANDARD OF REVIEW

A. Motion to Strike

Federal Rule of Civil Procedure 12(f) provides that “[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent,

or scandalous matter.” Affirmative defenses generally are subject to Federal Rule of Civil Procedure⁸, which demands a “short and plain” statement of those defenses. Although the Court has broad discretion in ruling on motions to strike, the Court may only strike an affirmative defense when it is “insufficient as a matter of law.” Microsoft Corp. v. Jesse’s Computs. & Repair, Inc., 211 F.R.D. 681, 683–

84 (M.D. Fla. 2002) (quoting Anchor Hocking Corp. v. Jacksonville Elec. Auth.,

Generally, motions to strike affirmative defenses are disfavored “because striking a portion of a pleading is a drastic remedy and because it is often sought by the movant simply as a dilatory tactic.” Waste Mgmt. Holdings, Inc. v. Gilmore, 252 F. 3d 316, 347 (4th Cir. 2001). However, where a defense “might confuse the issues in the case and would not, under the facts alleged, constitute a valid defense to the action . . . [it] should be deleted.” Id.; see also Reyher v. Trans World

Airlines, Inc., 881 F. Supp. 574, 576 (M.D. Fla. 1995). Nevertheless, in most situations when striking an affirmative defense, courts provide leave for defendants to replead unless doing so would be futile or unnecessary. See e.g., Romero v. Southern Waste Sys. LLC, 629 F. Supp. 2d 1356 (S.D. Fla. 2009).

B. Motion to Dismiss for Failure to State a Claim

“A motion to dismiss a counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6) is evaluated in the same manner as a motion to dismiss a complaint.” United States v. Zak, 550 F. Supp. 3d 1349 (N.D. Ga. 2021) (quoting Great Am. Assurance Co. v. Sanchuk, LLC, No. 8:10-cv-2568, 2012 WL 195526, at *2 (M.D. Fla. Jan. 23, 2012)). To survive a Rule 12(b)(6) motion to dismiss, the 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, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is 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.” Id. Legal conclusions and recitation of a claim’s elements are properly disregarded,

and courts are “not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). Courts must also view the complaint or counterclaim in the light most favorable to the plaintiff or counterplaintiff and must resolve any doubts as to the sufficiency of the complaint in the plaintiff or counter-plaintiff’s favor. Hunnings v. Texaco, Inc., 29 F. 3d 1480, 1484 (11th Cir. 1994) (per curiam).

In sum, courts must: reject conclusory allegations, bald legal assertions, and formulaic recitations of the elements of a claim; accept well-pled factual allegations as true; and view well-pled allegations in the light most favorable to the plaintiff (or counter-plaintiff). Iqbal, 556 U.S. at 679.

III. DISCUSSION

At the outset, the Court observes that most of this suit boils down to a factual dispute over who possesses proper rights in the Contested Mark and the terms of the June 2020 sale of Counter-Defendant AI LLC. Such factual disputes are not properly resolved at this procedural juncture. Relatedly, however, many of the Counter-Plaintiffs’ affirmative defenses and counterclaims amount to factual denials of the initial claims. These too are improper. As such, the Court first clarifies why the bulk of Defendants’ affirmative defenses will be stricken and then explains why Counts I and II of the Counterclaims are due for dismissal.

A. Motions to Strike

Counter-Plaintiffs affirmative defenses fall into three buckets: (1) attempts to factually negate necessary elements of Counter-Defendants’ prima case in its initial claims for relief; (2) affirmative defenses that might be proper yet are pled too vaguely for the Court to determine their propriety; and (3) legitimate affirmative defenses the merits of which will be borne out through the litigation process. The Court ordinarily hesitates to grant such requests to strike as many counter-pleadings often are replete with similar boilerplate defenses as those contained herein, but in light of the particularly flagrant violations herein, the

Court departs from its normal practice. First, Counter-Plaintiff must do more than allege a failure to state a claim or point out defects in Counter-Defendant’s initial prima facie case because such general defenses do not constitute proper affirmative defenses. Pk Studios, Inc. v. R.L.R. Invs., LLC, No. 2:15-cv-389, 2016 WL 4529323, at *2 (M.D. Fla. Aug. 30,

2016) (citing In re Rawson Food Serv., Inc., 846 F. 2d 1343, 1349 n.9 (11th Cir. 1988)). Consequently, the Court will strike the following affirmative defenses: the First,² Third, Sixth, Seventh, Eighth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth through Twenty- Fourth,³ Twenty-Fifth, Twenty-Sixth, Twenty-Seventh, Twenty-Eighth, Twenty-

Ninth, Thirtieth, and Thirty-Third Affirmative Defenses as they simply deny one or more necessary elements of Counter-Defendant’s initial five claims and thus are improper. (Docs. 23, 47). Of course, while the Court takes no position on whether such defenses will be successful, Counter-Plaintiffs are welcome to bring them at the proper procedural time through the proper procedural vehicle.

Second, Counter-Plaintiffs must replead the following affirmative defenses with more specific factual allegations or legal elaboration because they are either too vague or conclusory to properly put Counter-Defendant on notice of the

Motions to Strike: Second, Ninth, Tenth,⁶ Sixteenth, Thirty-First, Thirty-Second, Thirty-Fourth, Thirty-Fifth, Thirty-Sixth, Thirty-Ninth, and Fortieth Affirmative Defenses. (Docs. 23, 47). While many of these remaining affirmative defenses are not a Platonic exemplar of pleading, they do enough to survive in light of the disfavored nature of Counter-Defendant’s requested remedy. The Counter-

Plaintiffs should nevertheless identify precisely which of the claims to which they allegedly apply; if they apply to multiple claims, all of these applicable claims should be identified. See Byrne v. Nezhhat, 261 F. 3d 1075, 1129–31 (11th Cir. 2001), abrogated on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (criticizing “shotgun” pleading of affirmative defenses that do not specify the claim to which the defense is directed).

B. Motions to Dismiss

1. Declaratory Relief (Counts I & II) Numerous courts have used their discretion to dismiss or strike redundant counterclaims asserted under the Declaratory Judgment Act. See e.g., Mille Lacs Band of Chippewa Indians v. State of Minnesota, 152 F.R.D. 580, 582 (D. Minn. 1993) (“A redundant declaratory judgment is not a proper declaratory judgment and should be dismissed.”); see e.g., Gratke v. Andersen Windows, Inc., No. 10- cv-963, 2010 WL 5439763 (D. Minn. Dec.⁸, 2010), report and recommendation adopted, No. 10-cv-963, 2010 WL 5441940 (D. Minn. Dec. 28, 2010). Generally, courts dismiss counterclaims where “they have found them to be repetitious of issues already before the court via the complaint or affirmative defenses.” Boone v. MountainMade Found., 684 F. Supp. 2d 1, 12 (D.D.C. 2010); Ortho–Tain v. Rocky Mountain Orthodontics, Inc., No. 05C6656, 2006 WL 3782916, at *3 (N.D. Ill. Dec. 20, 2006); Rayman v. Peoples Sav. Corp., 735 F. Supp. 842, 852–53 (N.D. Ill. 1990) (noting this principle applies to counterclaims that merely “repackage” affirmative defenses); Tenneco Inc. v. Saxony Bar & Tube, Inc., 776 F. 2d 1375, 1379 (7th Cir. 1985) (observing that the “label ‘counterclaim’ has no magic” and that what “is really an answer or defense to a suit does not become an independent piece of litigation because of its label.”). That said, “mere exoneration from infringement does not always meet the necessities of a wrongfully accused defendant” because “in a patent or trademark infringement suit, finding the defendant innocent of infringement” does not necessarily “determine issues of,” for example, “title, validity, or the scope of the [intellectual property] claims,” so “[t]he Declaratory Judgment Act furnishes [the defendant] with the means of escape.” Dominion Elec. Mfg. Co. v. Edwin L. Wiegand Co., 126 F. 2d 172, 174–75 (6th Cir. 1942). Accordingly, when deciding whether to dismiss a counterclaim as redundant, courts consider whether the counterclaim’s request for declaratory judgment serves a useful purpose. Pettrey v. Enterprise Title Agency, Inc., No. 1:05-cv-1504, 2006 WL 3342633, at *3 (N.D. Ohio Nov. 17, 2006); Ortho–Tain,

Inc., 2006 WL 3782916, at *3. Declaratory judgment counterclaims do not serve a useful purpose when the resolution of the initial plaintiff’s claim, along with any related affirmative defenses asserted by the initial defendants, would resolve the questions raised by the counterclaim. Daily v. Federal Ins. Co., No. C04- 3791, 2005 WL 14734, at *6 (N.D. Cal. Jan.³, 2005). Courts following this rule of dismissal for redundancy note that “[a]lthough federal courts normally should adjudicate all claims within their discretion, in the declaratory judgment context this principle yields to consideration of practicality and wise judicial administration.” Id. Here, Count II of the Complaint alleges a claim for federal trademark infringement of the Contested Mark pursuant to 15 U.S.C. § 1114(1). (Doc. 1, ¶¶ 60–

71). In contrast, Count I of the Counterclaims asserts a claim for declaratory judgment of non-infringement of “the alleged trademark”—that is, the Contested Mark. (Doc. 23, p. 29; Doc. 47, pp. 29–30). Because resolution of the Counter- Defendant’s initial infringement claim and the Counter-Plaintiffs’ associated affirmative defenses and/or general defenses on the merits would necessarily resolve Count I of the Counterclaim, Count I would not serve a useful purpose and is merely duplicative and redundant of Count II of the Complaint. Furthermore, Count II of the Counterclaims which seeks a declaratory judgment of trademark invalidity similarly fails to serve a useful purpose because it also is duplicative of Count II of the Complaint for federal trademark infringement. See Miracle⁷, Inc. v. Halo Couture, LLC, No. 13-61643-civ, 2014

WL 11696708, at *7–8 (S.D. Fla. Jan. 17, 2014) (dismissing with prejudice declaratory judgment counterclaims asserting that (1) plaintiff lacks trademark rights in its marks, and (2) defendant did not infringe plaintiff’s trademark rights because “to resolve the trademark-infringement counts of [plaintiff’s] Complaint, the Court by necessity must resolve the two issues for which [defendant] seeks declaratory judgment”). Resolution of the Counter-Defendant’s initial claims and the surviving affirmative defenses will also necessarily resolve the issue of whether the Contested Mark is valid.⁷ Consequently, the Counter-Plaintiffs’ request for declaratory judgment must be dismissed.

1352 (Fed. Cir. 1999)). Claims of fraud in federal court are subject to the Federal Rules of Civil Procedure’s heightened pleading standard under Rule 9(b) which requires that plaintiffs plead these claims “with particularity;” this means “identifying the who, what, when, where, and how of the fraud alleged.” Omnipol, A.S. v. Multinational

Def. Servs., LLC, 32 F. 4th 1298, 1307 (11th Cir. 2022) (citing Mizzaro v. Home Depot, Inc., 544 F. 3d 1230, 1237 (11th Cir. 2008)). “Malice intent, knowledge, and other conditions of a person’s mind,” however, “may be alleged generally.” FED. R. CIV. P. 9(b). This heightened pleading standard ensures a dual purpose: first, it “alert[s] defendants to the precise misconduct with which they are charged” and second, it “protect[s] defendants against spurious charges of immoral and fraudulent behavior.” Ziemba v. Cascade Int’l., Inc., 256 F. 3d 1194, 1202 (11th Cir. 2001). Here, Counter-Defendant argues that Counter-Plaintiffs did not plead their trademark cancellation claims with particularity. (Doc. 33, pp. 11–16; Doc. 54, pp. 11–16). The Court disagrees. First, Counter-Defendant ignores that the allegations regarding mental state may be alleged generally and are not subject to the particularity requirement. (Doc. 33, pp. 11–16; Doc. 54, pp. 11–16). Second, Counter-Defendant appears not to recognize that the fraudulent statements allegedly made in the counterclaims were all made specifically with respect to the registration application for the Contested Mark with the United States Patent and Trademark Office. (Doc. 23, pp. 31–33; Doc. 47, pp. 30–32). As such, the Counter-

Plaintiffs did not merely recite the necessary elements but instead sufficiently alleged the who (Counter-Defendant), the what (several false statements or omissions in the application for trademark registration, including the failure to disclose other users’ rights to use the same or similar marks),⁹ the when (the date of submission to the United States Patent and Trademark Office), the where (the

United States Patent and Trademark Office), and how of the fraud alleged (the United States Patent and Trademark Office’s reliance on the truth of the application with knowingly false or misleading statements). Omnipol, 32 F. 4th at 1307; (Doc. 23, pp. 31–33; Doc. 47, pp. 30–32; Doc. 50, pp. 11–13; Doc. 56, pp. 10– 13). Therefore, the Counter-Plaintiffs’ trademark cancellation claim survives.

IV. CONCLUSION

Accordingly, it is ORDERED AND ADJUDGED as follows: 1. The First Motion to Strike (Doc. 32) is GRANTED IN PART and DENIED IN PART as set forth in the Order; 2. The First Motion to Dismiss (Doc. 33) GRANTED IN PART and DENIED IN PART as follows:

DENIED IN PART as set forth in the Order;
4. The Second Motion to Dismiss (Doc. 54) GRANTED IN PART and DENIED IN PART as follows: a. Counts I and II are DISMISSED WITH PREJUDICE; b. The Second Motion to Dismiss is otherwise denied;

5. Both Counter-Plaintiffs AI LLC and Christopher Allenger’s Answer and Counterclaims (Doc. 23) and Counter-Plaintiff Parsons’ Amended Answer and Counterclaims (Doc. 47) are hereby STRICKEN; and 6. On or before July 25, 2023, all three Counter-Plaintiffs may jointly refile one Second Amended Answer and Counterclaim.¹⁰ Failure to timely refile consistent with the directives of this Order may result in

dismissal of the counterclaims and an order barring the Counter- Plaintiffs from asserting the affirmative defenses without further notice. DONE AND ORDERED in Orlando, Florida on July 11, 2023.

PAUL G.

UNITED STATES®ISTRICT JUDGE Copies furnished to: Counsel of Record Unrepresented Parties