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A. Paul Philo v. Liminova

April 15, 2013

A. PAUL PHILO,
PLAINTIFF,
v.
LIMINOVA, INC., WALTER LIM, AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hon. Anthony J. Battaglia U.S. District Judge

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS (Doc. No. 5)

Defendants' filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) Plaintiff's first cause of action for fraudulent concealment and request for punitive damages. (Doc. No. 5.) The Plaintiff filed an opposition, (Doc. No. 10), and the Defendants filed a reply, (Doc. No. 11). For the reasons set forth below, the Defendant's motion to dismiss is GRANTED.

Background

Defendant Walter Lim ("Defendant") is an officer, director, and shareholder in Head First, Inc. ("Head First"). (Doc. No. 1-1, ¶ 2.) Head First was owned by Defendant and Don Lewis. (Id.) After Don Lewis' death, Plaintiff A. Paul Philo ("Plaintiff") succeeded to Don Lewis' interest in Head First. (Id.)

Since at least 1971, Head First has been in the business of developing, promoting, and marketing "Top Coverage," a non-medicated head spray to cover bald spots and mask thinning hair. (Id. at ¶ 7.) The "Top Coverage" name and mark are registered with the United States Patent and Trademark Office ("USPTO") under Registration No. 1813335. (Id.) Head First has continuously and exclusively used the "Top Coverage" mark in commerce in connection with the advertising, promotion, and sale of its hair care products. (Doc. No. 1-1, ¶ 8.)

On or about January 2011, Defendant advised Plaintiff that Head First was going to discontinue manufacturing and marketing the "Top Coverage" brand of products due to environmental regulations concerning the use of propellants, and that Head First would need to be dissolved. (Id. at ¶ 9.) The Plaintiff wanted to purchase the "Top Coverage" trademark and name from Head First and attempt to find a new manufacturer and continue to develop and market the product in compliance with the environmental regulations. (Id. at ¶ 10.) Defendant Lim agreed and in February 2011, Head First assigned all interest and goodwill in the "Top Coverage" trademark to Plaintiff for valuable consideration. (Id.) The Assignment Agreement was signed by Defendant Lim as president of Head First, and duly recorded with the Patent and Trademark Office on or about April 8, 2011. (Id.)

Plaintiff alleges that while the parties were negotiating and entering into the Assignment Agreement for Top Coverage, Defendant Lim was already marketing the "Top Coverage" hair product through his company ("Liminova") under the name and mark "TC Plus." (Doc. No. 1-1, ¶ 11.) Like "Top Coverage," "TC Plus" was a head spray sold in spray cans to conceal bald spots and thinning hair. (Id.) The "TC Plus" label stated, "If you like . . . Top Coverage You will love TC PLUS," and featured before-and-after photos of a male scalpvirtually identicalto those used for "Top Coverage" labels. (Id.) Moreover, "TC Plus" was being advertised in various outlets as "Top Coverage TC Plus." (Id.)

On April 27, 2011, two months after the execution of the Assignment Agreement, Liminova filed a trademark application with the USPTO for registration of the mark "TC Plus," Serial No. 85306449, for goods defined as "Hair care preparation, namely, hair tinting spray featuring spray on, wash out hair tinting and thickening spray in a variety of hair colors." (Doc. No. 1-1, ¶ 12.) In February 2012, Plaintiff filed an opposition to Defendant's trademark application and Liminova subsequently abandoned the application. (Doc. No. 1-1, ¶ 13; Doc. No. 10, p.3:19-20.)

On December 10, 2012, Plaintiff filed the instant complaint in San Diego Superior Court. Defendants subsequently removed the case to this court and filed the instant motion to dismiss.

Legal Standard

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the pleadings and allows a court to dismiss a complaint upon a finding that the plaintiff has failed to state a claim upon which relief may be granted. See Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court may dismiss a complaint as a matter of law for: (1) "lack of cognizable legal theory," or (2) "insufficient facts under a cognizable legal claim." SmileCare Dental Grp. v. Delta Dental Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). However, a complaint survives a motion to dismiss if it contains "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

Notwithstanding this deference, the reviewing court need not accept "legal conclusions" as true. Ashcroft v. Iqbal, -- U.S. -- , 129 S. Ct. 1937, 1949--50, 173 L.Ed.2d 868 (2009). It is also improper for the court to assume "the [plaintiff] can prove facts that [he or she] has not alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). On the other hand, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 129 S.Ct. at 1950. The court only reviews the contents of the complaint, accepting all factual allegations as true, and drawing all reasonable inferences in favor of the nonmoving party. al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009) (citations omitted).

Discussion

Defendants' move to dismiss Plaintiff's first cause of action for fraudulent concealment and Plaintiff's punitive damages claims pursuant to Rule 12(b)(6). Defendants challenge the sufficiency of Plaintiff's first cause of action, for fraudulent concealment, on the grounds that Plaintiff fails to allege that any statutory, common law, or contractual duty exists requiring the disclosure of facts alleged to have been concealed by Defendants. (Doc. No. 5-1, p.3.) Defendants also contend that the Plaintiff fails to sufficiently plead an act of malice, fraud, or oppression on behalf of ...


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