Xereas v. Heiss

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_______________________________
)
JOHN XEREAS, )
)
Plaintiff, )
)
v. ) Civil Action No. 12-456 (RWR)
)
MARJORIE HEISS, et al., )
)
Defendants. )
_______________________________)

MEMORANDUM OPINION AND ORDER

Plaintiff John Xereas brings this action against Marjorie

Heiss, Geoffrey Dawson, Riot Act D.C., LLC (“the LLC”), and

Squiid, Inc., alleging claims of trademark infringement, unfair

competition, conversion, breach of contract, breach of the

implied duty of good faith and fair dealing, fraudulent

inducement, conspiracy, tortious interference, unjust enrichment,

a violation of the Anti-Cybersquatting Consumer Protection Act

(“ACPA”), 15 U.S.C. § 1125(d), and defamation. The defendants

moved to dismiss eight of Xereas’s counts in the amended

complaint under Federal Rule of Civil Procedure 12(b)(6) for

failure to state claims for relief. The claims of breach of the

implied duty of good faith and fair dealing against Dawson and

Heiss, unjust enrichment against the LLC and cyber-squatting

against Dawson, Heiss and the LLC are adequately pled, and the

motion to dismiss will be denied as to those claims but granted

as to the remaining challenged claims.
 -2-

BACKGROUND
In 2005 and 2009, Xereas registered a group of domain names

using the Riot Act comedy name, including “riotactcomedy.com.”

Am. Compl. ¶¶ 14, 23. He conducted his entertainment business

for years using those names. Id. ¶¶ 18-19, 23. In May 2010,

Xereas, Dawson and Heiss agreed to launch a new comedy club in

Washington, D.C. called the Riot Act Comedy Club. Id. ¶ 30.
Xereas, Dawson and Heiss executed an Operating Agreement and, in

November 2010, an Amended Operating Agreement to establish the

LLC. Id. ¶¶ 32-35, Ex. 13, Am. and Restated Operating Agreement

of Riot Act DC, LLC (“Am. Operating Agreement”). After forming

the LLC, Dawson, Heiss and Xereas created a Business Plan. Id.

¶¶ 36-38, Ex. 14, Business Plan for Start Up Business for Riot

Act Comedy Theater (“Business Plan”). Starting in December 2010,

Xereas served as the club’s general manager and worked in a

variety of roles in preparing for the club’s opening and

thereafter. Id. ¶¶ 38, 44, 48. In January 2011, the LLC hired

Squiid to create a website for Xereas’s domain name

“riotactcomedy.com.” Id. ¶ 40. In November 2011, Xereas

completed paying his $100,000 capital contribution to the LLC.

Id. ¶ 45, 54. Dawson and Heiss agreed to compensate Xereas at an

annual salary of $42,000 starting in December 2011. Id. ¶ 56.

In January 2012, Dawson and Heiss removed Xereas from his

management role and, without Xereas’s knowledge or approval,

instructed Squiid to revise the domain name registration
 -3-

information for “riotactcomedy.com” to transfer ownership of the

domain names to the LLC. Id. ¶¶ 58, 60.
In March 2012, Xereas filed his complaint, and later, he

filed an eleven-count amended complaint which includes claims of

unlawful conversion and an ACPA violation against all defendants,

id., Counts IV, X; unjust enrichment claims against Dawson, Heiss

and the LLC, id., Count IX; and breach of contract, breach of the
duty of good faith and fair dealing, fraudulent inducement,

conspiracy to defraud, tortious interference, and defamation

claims against Dawson and Heiss, id., Counts V-VIII, XI.1

Dawson, Heiss and the LLC moved to dismiss under Rule 12(b)(6)

for failure to state a cause of action the unlawful conversion,

breach of contract, fraudulent inducement, conspiracy to defraud,

tortious interference, unjust enrichment, ACPA, and defamation

claims. Squiid moved to dismiss under Rule 12(b)(6) for failure

to state a cause of action the unlawful conversion and ACPA

claims against Squiid.

DISCUSSION
In considering a motion to dismiss under Rule 12(b)(6) for

failure to state a claim, a court accepts well-pleaded factual

allegations in the complaint as true and interprets them in the

light most favorable to the plaintiff. Howard Univ. v. Watkins,

857 F. Supp. 2d 67, 71 (D.D.C. 2012) (citing Warren v. District

1
The amended complaint also includes common law and Lanham
Act claims of trademark infringement and unfair competition
against Dawson, Heiss and the LLC. Am. Compl., Counts I-III.
 -4-

of Columbia, 353 F.3d 36, 39 (D.C. Cir. 2004)). The motion to
dismiss may be granted where facts alleged in the complaint “do

not raise a right to relief above the speculative level, or fail

to state a claim to relief that is plausible on its face.” Henok

v. Chase Home Finance, Civil Action No. 12-335 (RWR), 2013 WL

525696, at *4 (D.D.C. Feb. 13, 2013) (internal quotation marks
omitted).

I. CONVERSION

Xereas’s amended complaint alleges that the defendants

unlawfully converted the “RIOT ACT” and “hireacomic.com” domain

names.2 To state a claim for conversion under D.C. law, the

plaintiff must allege “‘(1) an unlawful exercise, (2) of

ownership, dominion, or control, (3) over the personal property

of another, (4) in denial or repudiation of that person’s rights

thereto.’” Johnson v. McCool, 808 F. Supp. 2d 304, 308 (D.D.C.

2011) (quoting Gov’t of Rwanda v. Rwanda Working Grp., 227 F.

Supp. 2d 45, 62 (D.D.C. 2002)); see also Baltimore v. District of
Columbia, 10 A.3d 1141, 1155 (D.C. 2011).

2
Domain names are unique combinations of alphanumeric
characters which allow users to connect to particular internet
sites. See Thomas v. Network Solutions, Inc., 176 F.3d 500, 502-
04 (D.C. Cir. 1999) (explaining the purpose and function of
domain names on the internet); Vizer v. VIZERNEWS.COM, 869 F.
Supp. 2d 75, 77 (D.D.C. 2012) (stating that “the internet domain
name system . . . links user-friendly names . . . to unique
numeric addresses that identify servers connected to the
internet”).
 -5-

Although D.C. courts have not addressed whether internet

domain names are intangible or tangible property,3 domain names
are generally considered intangible property. See Kremen v.

Cohen, 337 F.3d 1024, 1030 (9th Cir. 2002) (identifying an

interest in a domain name as an intangible property right);

Famology.com Inc. v. Perot Sys. Corp., 158 F. Supp. 2d 589, 591

(E.D. Pa. 2001) (same); but see In re Paige, 413 B.R. 882, 917-18
(Bankr. D. Utah 2009) (stating that a domain name is a type of

tangible property), aff’d on other grounds, 685 F.3d 1160 (10th

Cir. 2012).4 Whether D.C. courts would apply the tort of

3
Courts in this jurisdiction have recognized that
intangible property includes frequent flyer miles, Ficken v. AMR
Corp., 578 F. Supp. 2d 134, 143 (D.D.C. 2008), proprietary data
such as personnel records, 3D Global Solutions, Inc. v. MVM,
Inc., 552 F. Supp. 2d 1, 10 (D.D.C. 2008), and an individual’s
patent rights, Kaempe v. Myers, 367 F.3d 958, 963-64 (D.C. Cir.
2004).
4
Paige relied on Margae, Inc. v. Clear Link Technologies,
LLC, 620 F. Supp. 2d 1284 (D. Utah 2009), which recognized that
the Utah Supreme Court classified software as tangible personal
property for tax purposes because it “‘is information recorded in
a physical form which has a physical existence, takes up space on
the tape, disc, or hard drive, makes physical things happen, and
can be perceived by the senses.’” Id. at 1288 (quoting South
Cent. Utah Tel. Assoc., Inc. v. Auditing Div. of the Utah State
Tax Comm’n, 951 P.2d 218, 223–24 (Utah 1997)). The Margae court
concluded that a web page has all of those attributes. Id. The
Paige court used this analysis and found that domain names had a
“physical presence on a computer drive” and that they qualify as
“a type of tangible property that is capable of conversion.” See
Paige, 413 B.R. at 918. By contrast, the D.C. Circuit has held
that computer software is intangible property because the
software itself is valuable only because of the intangible
information stored in it. District of Columbia v. Universal
Computer Assocs., Inc., 465 F.2d 615, 617-19 (D.C. Cir. 1972).
Here, the value of a domain name arises from the electronic
information which matches a user’s query to the website
 -6-

conversion to intangible property is unsettled.
While other courts have concluded that the law of
conversion in other jurisdictions may protect
electronic data or information, . . . it remains an
open question whether District of Columbia law would
protect intangible property of this kind, see Kaempe v.
Myers, 367 F.3d 958, 963 (D.C. Cir. 2004) (observing
that the District of Columbia courts have provided
limited guidance on the protections to be afforded to
intangible property); Equity Grp., Ltd. v. PaineWebber
Inc., 48 F.3d 1285, 1286 (D.C. Cir. 1995) (per curiam)
(same). Meanwhile, Maryland, to which the District of
Columbia courts often look for guidance in the absence
of other precedent, . . . does not extend the tort of
conversion to cover intangible property rights beyond
those that “are merged or incorporated into a
transferable document[.]”

Council on American-Islamic Relations Action Network, Inc. v.

Gaubatz, 793 F. Supp. 2d 311, 339-40 (D.D.C. 2011) (internal

citations omitted). Maryland law continues to follow directly

Section 242 of the Restatement (Second) of Torts (1965) which

limits application of the tort of conversion of intangible

property rights to those that have been “‘merged or incorporated

into a transferable document’” and Maryland courts have not

extended the tort of conversion to “‘situations in which the

relevant document itself has not been transferred.’” Brass Metal
Products, Inc. v. E-J Enters., Inc., 984 A.2d 361, 378 (Md. Ct.

Spec. App. 2009) (quoting Allied Inv. Corp. v. Jasen, 731 A.2d

957, 965 (1999)) (finding that Maryland law does not recognize

the tort of conversion to protect the plaintiff’s intellectual

property rights in designs or shapes of aluminum railings); see

also Joe Hand Promotions, Inc. v. Md. Food & Entm’t, LLC, No.

associated with the domain name. See Thomas, 176 F.3d at 503.
 -7-

CCB-11-3272, 2012 WL 5879127, at *4 (D. Md. Nov. 19, 2012)

(granting motion to dismiss for failure to state a claim under

Maryland law of conversion of a television broadcast signal

because the complaint contains no factual allegation that

tangible documents incorporating the plaintiff’s intangible

property interests were transferred).

Here, the plaintiff alleges that “[a]t the direction of

Defendants Dawson and Heiss, . . . Defendant Squiid unlawfully

converted the RIOT ACT Domain Names and hireacomic.com domain

name by revising the Domain Name Registration information to

effectuate the . . . transfer of ownership of the [domain names]

from Plaintiff to the LLC[.]” Am. Compl., Count IV, ¶ 89.

Xereas relies upon Kremen v. Cohen, 337 F.3d 1024 (9th Cir.

2002), which held that a domain name is within the class of

property protected by the tort of conversion. Id. at 1030-35.

Kremen reasoned that under California law, a domain name is

property capable of being converted because a domain name is a

“well-defined interest” similar to “a share of corporate stock or

a plot of land,” domain name registrants have a “legitimate claim

to exclusivity” similar to deeds with plots of land, and domain

names are “valued, bought and sold, often for millions of

dollars.” Id. at 1030. The Kremen court explained that

California had rejected the Restatement’s requirement that

intangible property could be protected only where the intangible

rights are “merged in a document[.]” Id. at 1031-1033

(discussing Restatement (Second) of Torts § 242 (1965)).
 -8-

D.C. courts have not directly addressed this issue, but also

have not extended the tort of conversion to intangible property

such as domain names, and Maryland courts hold to the Restatement

rule limiting the tort of conversion of intangible property to

where the property is merged into a document. Gaubatz, 793 F.

Supp. 2d at 339-40. Xereas has not asserted any basis for his

cause of action beyond relying on Kremen which interpreted
California law and rejected the Restatement’s strict rule that

Maryland applies. Kremen, 337 F.3d at 1031-1033. Xereas does

not allege that his property interests were merged in any

tangible documents which were transferred to the defendants. In

sum, the plaintiff has failed to show that his claim against the

defendants for conversion states a cognizable cause of action.

II. BREACH OF CONTRACT

To state a claim for breach of contract under D.C. law, the

plaintiff must plead facts to state four elements: “(1) a valid

contract between the parties; (2) an obligation or duty arising

out of the contract; (3) a breach of that duty; and (4) damages

caused by breach.” Tsintolas Realty Co. v. Mendez, 984 A.2d 181,

187 (D.C. 2009). Also, “‘all contracts contain an implied duty

of good faith and fair dealing[,]’” which means that “‘neither

party shall do anything which will have the effect of destroying

or injuring the right of the other party to receive the fruits of

the contract.’” Murray v. Wells Fargo Home Mortg., 953 A.2d 308,

321 (D.C. 2008) (quoting Allworth v. Howard Univ., 890 A.2d 194,

201 (D.C. 2006)). “Liability lies for breach of the duty [of
 -9-

good faith and fair dealing] if a party (1) evades the spirit of

the contract, (2) willfully renders imperfect performance, or (3)

interferes with performance by the other party.” C & E Servs.,

Inc. v. Ashland Inc., 601 F. Supp. 2d 262, 276 (D.D.C. 2009)

(citing Allworth, 890 A.2d at 201). A claim for “breach of the

duty of good faith and fair dealing must necessarily arise out of

the performance or enforcement of the contract, not out of the

contract negotiations.” Id. at 275 (citing Ellipso, Inc. v.
Mann, 541 F. Supp. 2d 365, 373-74 (D.D.C. 2006)). D.C. law is

unsettled about whether a breach of the implied duty of good

faith and fair dealing claim may be brought as an independent

cause of action without a breach of an express contractual duty

claim. C & E Servs., 601 F. Supp. 2d at 274-75. However,

“breach of the implied covenant is not an independent cause of

action when the allegations are identical to other claims for

relief under [an] established cause of action.” Washington
Metro. Area Transit Auth. v. Quik Serve Foods, Inc., Civil Action

Nos. 04-838, 04-687 (RCL), 2006 WL 1147933, at *5 (D.D.C.

Apr. 28, 2006) (citing Jacobson v. Oliver, 201 F. Supp. 2d 93, 98

n.2 (D.D.C. 2002)).

Xereas’s breach of contract claim alleges that Dawson and

Heiss “breached their duty of good faith and fair dealing by

fraudulently inducing [Xereas] to enter into a business

relationship with them . . . and then terminating Plaintiff

Xereas’s participation, involvement, and ownership in the Venture

shortly after the club’s opening.” Am. Compl., Count V, ¶ 94.
 -10-

Dawson and Heiss move to dismiss the breach of contract claim

arguing in part that Xereas’s allegations do not specify the

express contractual duty owed or how the defendants allegedly

breached the contract. Defs. Heiss’, Dawson’s and the LLC’s Mem.

of Law in Supp. of Mot. to Dismiss (“Defs.’ Mem.”) at 7. Xereas

argues that there are two relevant contracts -- the Amended

Operating Agreement and the Business Plan -- and that these

contracts recognize his position as general manager. Pl.’s Resp.

to Defs.’ Mot. to Dismiss at 3, 5. Xereas also argues that Heiss

and Dawson entered the contract in bad faith and abruptly

terminated employees who assisted Xereas. Id. at 4-5.

Xereas’s amended complaint does not identify any express

contractual duty which Dawson and Heiss allegedly have breached.

The Amended Operating Agreement vests the broad authority to

engage and employ persons in the Managing Members and states that

“[a]ny vote, consent, approval, determination or other action

required or permitted to be taken by the Managing Members must be

approved by a majority . . . of the Managing Members.” Am.

Compl., Ex. 13, Am. Operating Agreement, Art. VI, ¶ 6.1(e).

Xereas’s amended complaint confirms that “any management

decisions should be controlled and dictated by a two-thirds vote

of the Class A Members.” Id. ¶ 35. Xereas’s allegations that

Heiss and Dawson terminated employees and removed Xereas as

general manager do not state a claim for breach of the Amended

Operating Agreement because Dawson and Heiss were empowered to do

so as the majority of Managing Members.
 -11-

Xereas also states that the Business Plan “specifically

recognized and detailed Plaintiff Xereas’ longstanding rights in,

and use of, the RIOT ACT Trademarks[.]” Am. Compl. ¶ 37.

Whether the Business Plan is in fact a contract is an open

question. “[A] valid contract requires ‘both (1) agreement as to

all material terms; and (2) intention of the parties to be

bound.’” Duk Hea Oh v. Nat’l Capital Revitalization Corp., 7
A.3d 997, 1013 (D.C. 2010) (quoting Jack Baker, Inc. v. Office

Space Dev. Corp., 664 A.2d 1236, 1238 (D.C. 1995)). It is

unnecessary to resolve this issue because even if the Business

Plan is a contract, Xereas has not identified any statement

within the Business Plan which created a contractual duty

regarding his trademarks which Heiss and Dawson violated. Thus,

Xereas’s claim of breach of an express contractual duty fails

because Xereas has identified no provision of either purported

contract that created any contractual duty that Heiss and Dawson

are alleged to have violated.

The defendants also move to dismiss Xereas’s implied duty of

good faith and fair dealing claim. The first portion of Xereas’s

implied duty claim alleges that the defendants caused Xereas “to

enter into a business relationship with them” and “to sign the

Operating Agreement[.]” Am. Compl., Count V, ¶ 94. This

allegation regarding “pre-contract negotiations” cannot state an

implied duty claim under D.C. Law. See Ellipso, 541 F. Supp. 2d

at 373-74.
 -12-

Xereas also alleges that Dawson and Heiss caused Xereas “to

contribute $100,000, and to contribute his time and industry

expertise, contacts, and business plans . . . [and] the right to

use [Xereas’s] RIOT ACT Trademarks and Domain Names, to the

Venture.” Am. Compl., Count V, ¶ 94. The defendants argue that

the allegations supporting this claim are identical to the

allegations underlying the Xereas’s fraudulent inducement claim

in Count VI of the amended complaint. Defs.’ Mem. at 10. While

the relevant factual allegations for the fraudulent inducement

claim are Heiss and Dawson’s actions before the parties entered

into the contract, the factual allegations for an implied duty

claim must have occurred after a contract was executed. Here,

Xereas has alleged that after Xereas, Heiss and Dawson entered

into a contract, Heiss and Dawson induced him to contribute the

$100,000 and continue his efforts in furtherance of the LLC by

giving Xereas “repeated verbal assurances . . . regarding their

continued interest in the Venture and, in particular, in working

together with Plaintiff Xereas to ensure the club’s success[.]”

Am. Compl. ¶ 53. These assurances allegedly were given to Xereas

before he paid his remaining $50,000 contribution and Xereas

continued to work for the club from that time through December

2011. Id. In addition, Xereas alleges that Heiss and Dawson

“terminat[ed] Plaintiff Xereas’ participation, involvement and

ownership in the Venture shortly after the club’s opening.” Id.,

Count V, ¶ 94.
 -13-

These allegations of actions by Dawson and Heiss after the

contract went into force support Xereas’s claim that Dawson and

Heiss “evade[d] the spirit of the contract” or “interfere[d] with

[Xereas’s] performance” of the contract by causing Xereas to

contribute further financial contribution and his professional

services despite an intention to terminate Xereas and deprive him

of the club’s future earnings. The plaintiff’s allegations, if

true, would show that Dawson and Heiss violated the standard that

“‘neither party shall do anything which will have the effect of

destroying or injuring the right of the other party to receive

the fruits of the contract.’” Murray, 953 A.2d at 321 (quoting

Allworth, 890 A.2d at 201). Xereas’s amended complaint states a

claim for breach of contract under an implied duty of good faith

and fair dealing theory against Dawson and Heiss.

III. FRAUDULENT INDUCEMENT, CONSPIRACY TO DEFRAUD

Under District of Columbia law, “[f]raudulent inducement

requires proof of: 1) a false [representation]; 2) made in

reference to a material fact; 3) with knowledge of its falsity;

4) with the intent to deceive; and 5) action taken in reliance

upon the misrepresentation.” McWilliams Ballard, Inc. v. Level 2
Dev’t, 697 F. Supp. 2d 101, 108 (D.D.C. 2010) (citing In re

Estate of McKenney, 953 A.2d 336, 342 (D.C. 2008)). Under D.C.

law, the elements of fraud and fraudulent inducement are the

same, In re U.S. Office Prod. Co. Sec. Litig., 251 F. Supp. 2d

77, 100 (D.D.C. 2003), and a claim of fraudulent inducement must

plead with particularity the circumstances constituting fraud
 -14-

under Federal Rule of Civil Procedure 9(b), Buy Back District of
Columbia, LLC v. Home Depot USA, Inc., Civil Action No. 04-1429

(PLF), 2004 WL 4012265, at *1 (D.D.C. Dec. 14, 2004). This rule

requires the claimant to plead specifically “‘the time, place and

content of the false [representations], the fact misrepresented

and what was retained or given up as a consequence of the

fraud.’” Kowal v. MCI Communic’ns Corp., 16 F.3d 1271, 1278

(D.C. Cir. 1994) (quoting United States ex rel. Joseph v. Cannon,

642 F.2d 1373, 1385 (D.C. Cir. 1981)). To establish a prima

facie case of civil conspiracy, a plaintiff must prove: “(1) an

agreement between two or more persons; (2) to participate in an

unlawful act; and (3) injury caused by an unlawful overt act

performed by one of [the] parties to the agreement, and in

furtherance of the common scheme.” Hill v. Medlantic Health Care

Grp., 933 A.2d 314, 334 (D.C. 2007) (citing Paul v. Howard Univ.,

754 A.2d 297, 310 (D.C. 2000)). However, “[c]ivil conspiracy ‘is

not an independent tort but only a means for establishing

vicarious liability for an underlying tort.’” Id. (citing Paul,
754 A.2d at 310 n.27).

In this case, Xereas claims that Dawson and Heiss

fraudulently induced him to

enter into a business relationship with them, to sign
the Operating Agreement, to contribute $100,000, and to
contribute his time and industry expertise, contacts,
and business plans, and to allow use of the RIOT ACT
Trademarks and Domain Names by the Venture, all while
intending to terminate without cause Plaintiff Xereas’
participation, involvement, and ownership shortly after
the club’s opening.
 -15-

Am. Compl., Count VI, ¶ 97. Xereas states that the fraudulent

inducement claim relies on the “representations made that

resulted in the Operating Agreement.” Pl.’s Resp. to Defs.’ Mot.

to Dismiss at 6. In particular, Xereas cites paragraphs 33, 34,

and 36 of the amended complaint as identifying the

representations which resulted in the Operating Agreement. Id.

However, these paragraphs only describe the formation of the

operating agreements and do not include any specific

representations by Dawson or Heiss which support the plaintiff’s

fraudulent inducement claim. See Am. Compl. ¶¶ 33, 34, 36.

Xereas may be referring to his assertion that he “permitted use

of his trademarks by the Venture relying upon his ownership

interest and role as General Manager to insure quality control

and proper use of his RIOT ACT Trademarks and RIOT ACT domain

names.” Id. ¶ 31. However, this statement does not satisfy the

requirement that the plaintiff plead with particularity the

“time, place and content of the false [representations]” by an

alleged tortfeasor. See Kowal, 16 F.3d at 1278. Because

Xereas’s amended complaint does not identify any particular

misrepresentation by Dawson and Heiss which induced Xereas to

sign the contract, Xereas has failed to state a claim for either

conspiracy to defraud or its underlying tort of fraudulent

inducement.
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IV. TORTIOUS INTERFERENCE WITH PROSPECTIVE BUSINESS
RELATIONSHIPS5
Under D.C. law, a claim for tortious interference with

prospective business relationships requires: “‘(1) the existence

of a valid business relationship or expectancy, (2) knowledge of

the relationship or expectancy on the part of the interferer, (3)

intentional interference inducing or causing a breach or

termination of the relationship or expectancy, and (4) resultant

damage.’” Jankovic v. Int’l Crisis Grp., 593 F.3d 22, 29 (D.C.

Cir. 2010) (quoting Bennett Enterprises v. Domino’s Pizza, Inc.,

45 F.3d 493, 499 (D.C. Cir. 1995)). “Valid business expectancies

may include lost future contracts and lost opportunities to

obtain customers.” Command Consulting Grp., LLC v. Neuraliq,

Inc., 623 F. Supp. 2d 49, 52 (D.D.C. 2009). However, any

business expectancy must be “‘commercially reasonable to

anticipate.’” Id. (quoting Browning v. Clinton, 292 F.3d 235,

242 (D.C. Cir. 2002)). “A valid business expectancy requires a

probability of future contractual or economic relationship and

not a mere possibility.” Robertson v. Cartinhour, 867 F. Supp.
2d 37, 60 (D.D.C. 2012) (internal quotation marks omitted); see

also Nat’l R.R. Passenger Corp. v. Veolia Transp. Servs., Inc.,

791 F. Supp. 2d 33, 56 (D.D.C. 2011) (stating that the plaintiff

5
The amended complaint captions this claim as “Tortious
Interference with Contractual Relations[.]” Am. Compl., Count
VIII. However, Xereas conceded that the amended complaint’s
caption was inaccurate and argued that the allegations in the
amended complaint support the claim of tortious interference with
prospective business relationships. Pl.’s Resp. to Defs.’ Mot to
Dismiss at 8.
 -17-

must show a “reasonable likelihood” of receiving a contract and

“mere speculative contractual expectations or hope are

insufficient” to state a claim for tortious interference with

prospective business relationships (internal quotation marks

omitted)). A claim of tortuous interference with prospective

business relations cannot survive where the plaintiff does not

allege any specific future business relations or expectancies and

only provides general references to potential opportunities. See
e.g., Command Consulting Grp., LLC, 623 F. Supp. 2d at 52-53;

Sheppard v. Dickstein, Shapiro, Morin & Oshinsky, 59 F. Supp. 2d

27, 34 (D.D.C. 1999); Kwang Dong Pharm. Co. v. Han, 205 F. Supp.

2d 489, 496-97 (D. Md. 2002) (dismissing a tortuous interference

claim under D.C. law because the plaintiff “has not pointed to

any specific contractual relations that [the defendant] allegedly

interfered with”).

Here, Xereas has not alleged an identified prospective

business relationship which is commercially reasonable to

anticipate. Xereas generally alleges that Dawson and Heiss

interfered with his “long standing business relationships with

numerous persons in the comedy field[.]” Pl.’s Resp. to Defs.’

Mot. to Dismiss at 8; see Am. Compl. ¶¶ 12, 71-73. Xereas

further alleges that Dawson and Heiss’s actions interfered with

“his ability to maintain contact and relationships, and continue

doing business” with Xereas’s contacts in the entertainment

industry, specifically “current and prospective customers and

industry players[.]” Am. Compl., Count VIII, ¶¶ 104-05.
 -18-

Xereas’s claim focuses on his past positions and relationships;

Xereas’s failure to identify any specific future employment

prospect undermines his claim. The amended complaint has not

stated a cause of action for tortious interference with

prospective business relations against Dawson and Heiss.

V. UNJUST ENRICHMENT

“Unjust enrichment occurs when: (1) the plaintiff conferred

a benefit on the defendant; (2) the defendant retains the

benefit; and (3) under the circumstances, the defendant’s

retention of the benefit is unjust.” Peart v. District of

Columbia Hous. Auth., 972 A.2d 810, 813 (D.C. 2009) (quoting News

World Communic’ns, Inc. v. Thompsen, 878 A.2d 1218, 1222 (D.C.

2005)). “For defendants to be liable for unjust enrichment,

their actions must be ‘unjust,’ that is to say, they must have

committed some ‘wrongful act.’” Griffith v. Barnes, 560 F. Supp.

2d 29, 34 (D.D.C. 2008) (citing Thompsen, 878 A.2d at 1225).

“‘[T]here can be no claim for unjust enrichment when an express

contract exists between the parties.’” Albrecht v. Comm. on Emp.
Benefits of the Fed. Reserve Emp. Benefits Sys., 357 F.3d 62, 69

(D.C. Cir. 2004) (quoting Schiff v. AARP, 697 A.2d 1193, 1194

(D.C. 1997)). The court must evaluate unjust enrichment claims

on a “case-by-case basis, considering the particular

circumstances giving rise to the claim.” Peart, 972 A.2d at 814.

Xereas concedes that he has not stated an unjust enrichment

claim against Heiss and Dawson because the existence of an

express contract between the managing members of the LLC
 -19-

precludes such a claim. Pl.’s Resp. to Defs.’ Mot. to Dismiss at

8. Xereas instead argues that his unjust enrichment claim can

survive as to the LLC, because there is no express contract

between Xereas and the LLC. Id.

As an initial matter, the Amended Operating Agreement does

not expressly state whether the LLC is a party to the agreement.

The provision of the D.C. Code in force in 20106 that governed
the creation of limited liability companies, Chapter 10 of Title

29, did not specify whether an LLC is a party to its own

operating agreement, and D.C. courts have not addressed this

precise issue. Other courts addressing this issue have focused

on the text of the relevant state statute governing the creation

of limited liability companies. See Elf Atochem North America,

Inc. v. Jaffari, 727 A.2d 286, 293 (Del. 1999) (holding that a

limited liability corporation was bound by its operating

agreement, even though the agreement was signed only by the LLC’s

members and not by the corporation itself because Delaware Code

tit. 6 § 18-101(7) states that “[a] limited liability company is

bound by its limited liability company agreement whether or not

the limited liability company executes the limited liability

company agreement”); Trover v. 419 OCR, Inc., 397 Ill. App. 3d
403, 408-09 (2010) (holding that two LLCs were not parties to

6
The amended complaint states that Xereas, Heiss and Dawson
executed the original Operating Agreement in May 2010 and the
Amended Operating Agreement at issue here in November 2010. Am.
Compl. ¶¶ 33-34. The section of the D.C. Code governing the
creation of LLCs at that time was repealed and replaced in July
2011.
 -20-

their own operating agreements where no member signed the

agreement on behalf of the LLC because the Illinois Limited

Liability Company Act stated that “[a] limited liability company

is a legal entity distinct from its members” and it was clear

from the Operating Agreement that the members understood how to

legally bind the LLC but did not do so).

The D.C. statute applicable at the time stated that “[t]he

members of a limited liability company may enter into an

operating agreement to regulate or establish the affairs of the

limited liability company[.]” D.C. Code § 29-1018(a) (2001).

This language did not reflect that a limited liability company

itself was a party to its operating agreement. The Amended

Operating Agreement here does not list the LLC on the signatories

page, and it does not include the LLC in the first paragraph as

one of the parties entering into the agreement. The “Formation

and Name” section of the Amended Operating Agreement

distinguishes between the parties and the LLC in stating that

“[t]he parties to this Agreement agree to and do hereby form a

limited liability company under the name Riot Act DC, LLC.” Am.

Compl., Ex. 13, Am. Operating Agreement, Art. II, ¶ 2.1. The

Amended Operating Agreement also provides that managing members

have the power to legally bind the LLC. Id., Ex. 13, Am.
Operating Agreement, Art. VI, ¶ 6.1(b)(ii-iii). As happened in

Trover, the parties here could legally bind the LLC to an

agreement, but did not do so. Under these circumstances, the

Amended Operating Agreement did not create a contract between the
 -21-

LLC and Xereas. Xereas’s claim for unjust enrichment survives

the first challenge.

Heiss, Dawson, and the LLC also argue that Xereas’s unjust

enrichment claim against the LLC cannot survive because litigants

may not assert an unjust enrichment claim “‘where there is an

express contract that governs the parties’ conduct.’” Defs.’

Reply at 14 (quoting Plesha v. Ferguson, 725 F. Supp. 2d 106, 112
(D.D.C. 2010)). The defendants state that the Amended Operating

Agreement governs the rights and responsibilities of the parties

and Xereas’s unjust enrichment claim against the LLC is

foreclosed. Id. However, Plesha stands for the proposition that

a claim for unjust enrichment is inappropriate where the parties

entered a contract with one another. Plesha cited only cases

which follow this distinction, and it reinforced the principle by

quoting the D.C. Court of Appeals: “‘One who has entered into a

valid contract cannot be heard to complain that the contract is

unjust, or that it unjustly enriches the party with whom he or

she has reached agreement.’” Plesha, 725 F. Supp. 2d at 112
(quoting Jordan Keys & Jessamy, LLP v. St. Paul Fire and Marine

Ins. Co., 870 A.2d 58, 64 (D.C. 2005)) (emphasis added). Since

the LLC is not a party to the Amended Operating Agreement, the

defendants’ reliance on Plesha is misplaced. The D.C. Court of

Appeals has recognized that the unjust enrichment doctrine could

apply despite the presence of a contract with another party

“where A, who claims that B has been unjustly enriched at A’s

expense, has a contract with C rather than with B. It is not at
 -22-

all clear to us that in such a situation, the existence of a

contract with C should automatically bar A’s claim of unjust

enrichment against B.” Jordan Keys & Jessamy, 870 A.2d at 64.

Xereas’s unjust enrichment claim must reflect that “under

the circumstances, the defendant’s retention of the benefit is

unjust.” Peart, 972 A.2d at 813. Here, Xereas alleges that his

substantial efforts for the LLC in working on the website,

developing the company’s marketing, advertising and social media

strategies, fostering relations with managers, agents, comics,

and other contacts, booking talent for shows, and various other

aspects was provided “for no compensation . . . in anticipation

of future earnings from club operations.” Am. Compl. ¶ 44. By

November 2011, Xereas had paid his $100,000 contribution in full.

Id. ¶¶ 45, 54. Under the Amended Operating Agreement, Xereas was

entitled to “a reasonable, market-based salary as compensation

for the performance of his . . . management responsibilities.

Any consideration to be paid as salaries by the [LLC] to the

Managing Members shall be determined by the Managing Members in

their reasonable discretion.” Id., Ex. 13, Am. Operating
Agreement, Art. VI, ¶ 6.4. Xereas alleges that in December 2011,

Dawson and Heiss agreed to pay Xereas an annual salary of $42,000

and Xereas has received only “a little over $8,000 for 2 years of

work and dedication.” Id. ¶ 56. Any complaint about Xereas’s

compensation after Xereas secured the annual salary agreement in

December 2011 cannot be the basis of Xereas’s unjust enrichment

claim. On the other hand, the complaint’s allegations of
 -23-

Xereas’s uncompensated efforts for the LLC from December 2010 to

December 2011, when viewed in the light most favorable to Xereas,

plead sufficient facts to state a cause of action for unjust

enrichment against the LLC.

VI. CYBER-SQUATTING UNDER THE ACPA

The ACPA makes liable to the owner of a mark any person who

“has a bad faith intent to profit from that mark . . . and . . .

registers, traffics in, or uses a domain name that . . . is

identical or confusingly similar to that mark . . . [if it] is

famous [or distinctive] at the time of registration of the domain

name[.]” 15 U.S.C. § 1125(d)(1)(A). The statute “prohibits the

bad faith registration of trademarks as domain names.” Vizer v.

VIZERNEWS.COM, 869 F. Supp. 2d 75, 76 (D.D.C. 2012). “To succeed

on an ACPA claim, Plaintiff must demonstrate that: (1) its

trademark is a distinctive or famous mark entitled to protection;

(2) Defendants’ domain name is identical or confusingly similar

to the Plaintiff’s mark; and (3) Defendants ‘register[],

traffic[] in, or use[]’ a domain name with the bad faith intent

to profit from it.” Hanley-Wood LLC v. Hanley Wood LLC, 783 F.
Supp. 2d 147, 152 (D.D.C. 2011) (quoting 15 U.S.C.

§ 1125(d)(1)(A)). Under the first element, the mark must be

either distinctive or famous “at the time of registration of the

domain name.” 15 U.S.C. § 1125(d)(1)(A)(ii)(I)-(II). “In

determining whether a person has acted with bad faith, the Court

may consider such factors as . . . whether the person has

previously used the name to offer goods or services for sale, and
 -24-

whether the person intended to divert consumers from the

infringed owner’s website either for commercial gain or to

tarnish or disparage the mark by creating a likelihood of

confusion as to the source or sponsorship of the site.” Hanley-

Wood, 783 F. Supp. 2d at 152 (citing 15 U.S.C. § 1125(d)(1)(B)).7

7
The statute provides a list of nine factors to consider in
determining whether a person has a bad faith intent to profit:
(I) the trademark or other intellectual property rights
of the person, if any, in the domain name;
(II) the extent to which the domain name consists of
the legal name of the person or a name that is
otherwise commonly used to identify that person;
(III) the person’s prior use, if any, of the domain
name in connection with the bona fide offering of any
goods or services;
(IV) the person’s bona fide noncommercial or fair use
of the mark in a site accessible under the domain name;
(V) the person’s intent to divert consumers from the
mark owner’s online location to a site accessible under
the domain name that could harm the goodwill
represented by the mark, either for commercial gain or
with the intent to tarnish or disparage the mark, by
creating a likelihood of confusion as to the source,
sponsorship, affiliation, or endorsement of the site;
(VI) the person’s offer to transfer, sell, or otherwise
assign the domain name to the mark owner or any third
party for financial gain without having used, or having
an intent to use, the domain name in the bona fide
offering of any goods or services, or the person’s
prior conduct indicating a pattern of such conduct;
(VII) the person’s provision of material and misleading
false contact information when applying for the
registration of the domain name, the person’s
intentional failure to maintain accurate contact
information, or the person's prior conduct indicating a
pattern of such conduct;
(VIII) the person’s registration or acquisition of
multiple domain names which the person knows are
identical or confusingly similar to marks of others
that are distinctive at the time of registration of
such domain names, or dilutive of famous marks of
others that are famous at the time of registration of
such domain names, without regard to the goods or
 -25-

The defendants move to dismiss the ACPA claim arguing that

Xereas has not stated a claim for cyber-squatting. They argue

that the ACPA does not apply to the Riot Act domain names because

it was Xereas who registered them and that occurred before the

Riot Act trademarks became distinctive.8 Although Xereas admits

that he registered the domain names originally, he argues that

the defendants re-registered the domain names for “unlawful and

deceptive purposes.” Pl.’s Resp. to Def. Squid’s Mot. to Dismiss

at 3; see Am. Compl. ¶ 60.
This dispute turns on whether the term “registers” and

“registration” in the ACPA refer only to the initial registration

of a domain name or also to the “re-registration” of a domain

name. The defendants rely on GoPets Ltd. v. Hise, 657 F.3d 1024

(9th Cir. 2011), which held that “re-registration of a currently

registered domain name by a new registrant . . . is not a

‘registration’ within the meaning of § 1125(d)(1).” Id. at

1026.9 Xereas seeks to distinguish his case from GoPets because

services of the parties; and
(IX) the extent to which the mark incorporated in the
person’s domain name registration is or is not
distinctive and famous within the meaning of subsection
(c) of this section.
15 U.S.C. § 1125(d)(1)(B)(i).
8
Although this argument is in Squiid’s motion to dismiss,
Heiss, Dawson and the LLC’s motion to dismiss incorporated “all
arguments set forth in Squiid’s motion to dismiss that are
applicable to them.” Defs.’ Mem. at 2.
9
The GoPets court explained that:
[T]here are three primary actors in the domain name
system. First, companies called “registries” operate a
database (or “registry”) for all domain names within
the scope of their authority . . . . Second, companies
called “registrars” register domain names with
 -26-

in that case, there was a lawful transfer of ownership of the
domain name to a new entity which later sought to register the

name, whereas here, Xereas alleges that “the re-registration was

done for unlawful and deceptive purposes.” Pl.’s Resp. to Def.

Squiid’s Mot. to Dismiss at 3.

In GoPets, plaintiff GoPets Ltd. alleged that defendants
Edward and Joseph Hise and their company Digital Overture

violated the ACPA through re-registering the domain name

gopets.com. Edward Hise registered gopets.com in his own name in

1999 -- years before GoPets Ltd. was founded in 2004 –- and later

transferred the registration of the domain name to Digital

Overture in 2006. GoPets, 657 F.3d at 1026-27. The parties

agreed that the domain name was not “identical or confusingly

similar to” a distinctive trademark in 1999 when Edward Hise

originally registered it, and that the domain name was

distinctive in 2006 when the domain name was transferred to
Digital Overture. Id. at 1030. The GoPets court noted that the

ACPA did not define the term registration, id., but held that the

term registration in the ACPA did not refer to “re-registrations”

because that interpretation does not comport with traditional

registries on behalf of those who own the names.
Registrars maintain an ownership record for each domain
name they have registered with a registry. Action by a
registrar is needed to transfer ownership of a domain
name from one registrant to another. Third,
individuals and companies called “registrants” own the
domain names. Registrants interact with the
registrars, who in turn interact with the registries.
GoPets, 657 F.3d at 1030 (quoting Office Depot Inc. v. Zuccarini,
596 F.3d 696, 699 (9th Cir. 2010)).
 -27-

property law principles which grant a property owner the right to

sell all of his rights in property to another. Id. at 1031-32.

In particular, GoPets stated that the original registrant Edward

Hise would have had all rights to the domain name if he had kept

the domain name in his own personal name and that there was “no

basis in [the] ACPA to conclude that a right that belongs to an

initial registrant of a currently registered domain name is lost

when that name is transferred to another owner.” Id. at 1031.
GoPets explained that the ACPA should not be interpreted to deny

Edward Hise the ability to validly transfer the rights in the

domain name to a third party after the GoPets mark became

distinctive because Hise’s property rights in the domain name

would be inalienable.10

Presumably, the GoPets court viewed the potential

inalienability11 of Hise’s property rights in the domain name as

the potential ACPA liability to which Hise or his company might

have been subject if re-registration were covered under the ACPA.

10
Courts have come to opposite conclusions when considering
whether the terms “register” and “registration” in the ACPA refer
only to the initial registration. Compare Ricks v. BMEzine.com,
LLC, 727 F. Supp. 2d 936, 954 (D. Nev. 2010) (“The statute
[§ 1125(d)(1)(A)] does not refer to an original registration or
the registration that creates the domain name. . . . The Act
provides no exception for re-registrations by the same owner.
Any registration thus may bring the registrant within the
statute’s purview.”), with Vizer, 869 F. Supp. 2d at 81-82
(citing the GoPets decision for the proposition that re-
registration of a domain name is not a “registration” under 15
U.S.C. § 1125(d)(1)), and AIRFX.com v. AirFX LLC, No. CV 11-1064
FJM, 2012 WL 3638721, at *3-4 (D. Ariz. Aug. 24, 2012) (same).
11
An inalienable property interest is one that is “not
transferable or assignable[.]” Black’s Law Dictionary (9th ed.
2009).
 -28-

But, the statute does not take away the initial registrant’s

rights to sell or transfer all of the rights he or she owns in a

distinctive or famous domain name to any other party. The

statute simply requires that a domain name registrant not

register the domain name with a bad faith intent to profit. The

ACPA’s focus is on the transferee’s bad faith intent to profit

from re-registering a domain name, not on restricting the ability

of a domain name owner to sell or transfer his property interest

in the domain name to anyone he would prefer. GoPets is not
persuasive as it failed to address how Digital Overture’s good

faith would free Hise from worry about liability or alienability

of his domain name.12 By interpreting the term registration as

applying to re-registrations, the scope of coverage extends to

each registrant of a domain name rather than only the first

registrant. This interpretation furthers the statute’s purpose

of eliminating cyber-squatting. The congressional conference

report on the ACPA stated that the ACPA applies “only to cases

where the plaintiff can demonstrate that the defendant

registered, trafficked in, or used the offending domain name with

bad-faith intent to profit from the goodwill of a mark belonging

to someone else.” H.R. Conf. Rep. No. 106-464 at *109 (1999),

1999 WL 1095089. The Senate report said “the abusive conduct

that is made actionable is appropriately limited just to

bad-faith registrations and uses of others’ marks by persons who

12
Interestingly, GoPets did discuss the good faith factor
in discussing domain name grabs that Hise engaged in after GoPets
Ltd. was up and running.
 -29-

seek to profit unfairly from the goodwill associated therewith.”

S. Rep. No. 106-140 at *8 (1999), 1999 WL 594571. These

statements of congressional intent apply with equal force to the

initial registration and later re-registrations. See Ricks, 727

F. Supp. 2d at 954 (“If a domain name was registered in good

faith originally, but thereafter re-registered in bad faith, the

cybersquatter would escape liability, a result not supportable by

the statutory scheme.”). In addition, the ACPA provides no

reason why any party who registers a distinctive or famous domain

name with bad faith intent to profit after the original

registration should escape the statute’s enforcement. The terms

“register” and “registration” in § 1125(d)(1)(A) should be read

to refer to the initial registration and later re-registrations

of the domain name.

In this case, many of the domain names at issue were

registered by Xereas in 2005. Am. Compl. ¶ 14. Xereas alleges

that the defendants re-registered the domain names by revising

the registration information for the Riot Act domain names in

2012 when the Riot Act trademarks were distinctive. Id. ¶¶ 60,
111. Xereas also alleges that the defendants had bad faith

intent to profit from the use of the Riot Act domain names which

were identical or confusingly similar to the Riot Act trademarks.

Id. ¶¶ 110, 112. In particular, Xereas alleges that continued

use of the Riot Act domain names and trademarks by Dawson, Heiss

and the LLC has caused “confusion, mistake, and deception on the

part of consumers” and mislead the public and individuals in the
 -30-

entertainment industry “into believing that the LLC’s business

and activities are authorized by, attributable to, sponsored by,

or associated with[] Plaintiff.” Id. ¶¶ 71, 72. Here, the

factual allegations in the amended complaint state a claim for

cyber-squatting under the ACPA against Dawson, Heiss and the LLC.

However, the cyber-squatting claim will be dismissed against

Squiid. Squiid argued that the ACPA does not apply to Squiid

because it did not register, traffic in, or use the Riot Act

domain names, and that the amended complaint does not allege any

facts supporting a reasonable inference of Squiid’s bad faith

intent to profit. Def. Squiid’s Mot. to Dismiss at 7-10. Xereas

did not respond to these arguments relating only to Squiid, and

the arguments will be deemed conceded. See Stephenson v. Cox,

223 F. Supp. 2d 119, 121 (D.D.C. 2002) (“[W]hen a plaintiff files

a response to a motion to dismiss but fails to address certain

arguments made by the defendant, the court may treat those

arguments as conceded[.]”).

VII. DEFAMATION

To state a claim for defamation under D.C. law, the

plaintiff must show four elements: “‘(1) that the defendant made

a false and defamatory statement concerning the plaintiff; (2)

that the defendant published the statement without privilege to a

third party; (3) that the defendant’s fault in publishing the

statement amounted to at least negligence; and (4) either that

the statement was actionable as a matter of law irrespective of

special harm or that its publication caused the plaintiff special
 -31-

harm.’” Solers, Inc. v. Doe, 977 A.2d 941, 948 (D.C. 2009)

(quoting Oparaugo v. Watts, 884 A.2d 63, 76 (D.C. 2005)).
“District of Columbia courts have held that a defamation claim

survives a Rule 12(b)(6) motion to dismiss only if ‘the contested

statements are both verifiable and reasonably capable of

defamatory meaning.’” Franklin v. Pepco Holdings, Inc., 875 F.

Supp. 2d 66, 74 (D.D.C. 2012) (quoting Weyrich v. New Republic,
Inc., 235 F.3d 617, 620 (D.C. Cir. 2001)). “A publication is

defamatory ‘if it tends to injure plaintiff in his trade,

profession or community standing, or lower him in the estimation

of the community.’” Rosen v. American Israel Pub. Affairs Comm.,

Inc., 41 A.3d 1250, 1256 (D.C. 2012) (quoting McBride v. Merrell

Dow and Pharm., Inc., 540 F. Supp. 1252, 1254 (D.D.C. 1982)).

“[A]n allegedly defamatory remark must be more than unpleasant or

offensive; the language must make the plaintiff appear odious,

infamous, or ridiculous.” Id. (citing Howard Univ. v. Best, 484

A.2d 958, 989 (D.C. 1984)) (internal quotation marks omitted).

As a general rule, . . . a statement of fact may be the
basis for a defamation claim, [but] a statement of pure
opinion cannot. Nonetheless, . . . statements of
opinion can be actionable if they imply a provably
false fact, or rely upon stated facts that are provably
false. Thus, a statement of opinion is actionable if
-- but only if –- it has an explicit or implicit
factual foundation and is therefore objectively
verifiable. On the other hand, if it is plain that a
speaker is expressing a subjective view, an
interpretation, a theory, conjecture, or surmise,
rather than claiming to be in possession of objectively
verifiable facts, the statement is not actionable.

Rosen, 41 A.3d 1250, 1256 (D.C. 2012) (internal quotation marks
omitted).
 -32-

In this case, Xereas alleges that Heiss and Dawson made oral

and written statements to “members of the entertainment industry

and the general public” representing that Xereas’s employment was

terminated because of his “incompetence, dishonest business

practices, deceptive sales practices, and other like false and

defamatory claims.” Am. Compl. ¶ 63, see also id., Count XI,

¶ 114. Xereas further alleges that Dawson and Heiss acted with

“reckless disregard for the truth or falsity” and that the

statements “irreparably harmed Xereas[.]” Id., Count XI, ¶¶ 117-
19.

Dawson and Heiss move to dismiss the defamation claim

arguing that Xereas does not sufficiently allege facts to state

that the statements are actionable under D.C. law. Dawson and

Heiss argue that the statements are “generalized critical

statements” which “cannot form the basis of a defamation claim

unless the statements reference specific incidents that can be

found to be provably false.” Defs.’ Reply at 15. Defendants

rely on the Rosen case arguing that the alleged statements are

not actionable because they are statements of opinion which do

not have “‘an explicit or implicit factual foundation[.]’”

Defs.’ Mot to Dismiss at 17 (quoting Rosen, 41 A.3d at 1256). In

response, Xereas states, without citation to any authority, that

accusing a business person of dishonesty is not a statement of

opinion, but rather is a statement of fact. Pl.’s Resp. to

Defs.’ Mot. to Dismiss at 10.
 -33-

In Rosen, the American Israel Public Affairs Committee

terminated Rosen’s employment and later published a statement

that Rosen’s behavior “did not comport with the standards that

AIPAC expects of its employees[.]” Id. at 1256 (internal

quotation marks omitted). The D.C. Court of Appeals found that

this statement was not provably false because the reference to

“standards” was too general to form the basis of the defamation

action. Id. at 1258-60. Rosen cited with approval another case

that affirmed summary judgment for a defendant employer on a

defamation claim where the employer stated that it had fired an

employee for actions that were “‘prejudicial to the company’” and

that the employees had “engaged in ‘disloyal and disruptive

activity’” and “‘conduct unacceptable by any business standard.’”

Id. at 1258 (quoting McClure v. American Family Mut. Ins. Co.,

223 F.3d 845, 853 (8th Cir. 2000)). The Rosen court reasoned

that although certain events could have formed the basis for the

statements in McClure, “no one learned of particular incidents
from the words used” and the statements “exuded merely a

subjective evaluation –- essentially a statement of opinion

without an explicit or implicit factual foundation.” Id. at 1259

(internal quotation marks omitted). Similarly, Xereas’s amended

complaint alleges only statements of opinion which do not

affirmatively provide a factual foundation. In particular, the

characterization of his “incompetence” is a statement of opinion

not unlike a characterization of disloyalty. The alleged

statements that Xereas engaged in “dishonest business practices”
 -34-

and “deceptive sales practices” are also not sufficiently

verifiable or provably false and are similar to the statement

that one engaged in “conduct unacceptable by any business

standard.” See McClure, 223 F.3d at 853. Shor Int’l Corp. v.

Eisinger Enterprises, Inc., No. 90 Civ. 2353 (RJW), 2000 WL

1793389, at *3 (S.D.N.Y. Dec. 5, 2000), too, found a statement

that a plaintiff engaged in dishonest business and sales

practices to be “a statement of opinion” which “is not a

verifiable statement of fact.”

Nor does Xereas allege that the publication of the

statements caused him special harm. Special harm, also known as

“special damages,” are limited to “actual pecuniary loss, which

must be specially pleaded and proved.” Fed. Aviation Admin. v.

Cooper, 132 S. Ct. 1441, 1451 (2012). Here, Xereas alleges only

that the statements have “harmed Plaintiff, his personal and

professional reputation and his future business prospects.” Am.

Compl., Count XI, ¶ 119. Simply asserting the risk of future

harm is insufficient. Xereas must allege some specific harm and

the actual pecuniary loss arising from that harm. Franklin, 875
F. Supp. 2d at 75. Xereas does not do so here.

Because Xereas does not allege that the statements were

actionable as a matter of law or that the publication of the

statements caused the plaintiff special harm, Xereas does not

state a claim against Heiss and Dawson for defamation.
 -35-

CONCLUSION AND ORDER

Xereas’s amended complaint pleads sufficient facts to state

a claim for relief for the breach of the duty of good faith and

fair dealing against Dawson and Heiss, unjust enrichment against

the LLC and cyber-squatting against Dawson, Heiss and the LLC.

However, Xereas does not plead facts to state his conversion,

breach of contract, fraudulent inducement, conspiracy to defraud,

tortious interference or defamation claims. Accordingly, it is

hereby

ORDERED that defendants’ motions [15, 16] to dismiss be, and

hereby are, GRANTED IN PART and DENIED IN PART. The amended

complaint’s conversion, breach of contract, fraudulent

inducement, conspiracy to defraud, tortious interference and

defamation claims in Counts IV through VIII and XI, the cyber-

squatting claim against Squiid in Count X and the unjust

enrichment claim against Heiss and Dawson are DISMISSED.

However, the motion to dismiss the breach of the implied duty of

good faith and fair dealing claim in Count V, the unjust

enrichment claim against the LLC in Count IX, and the cyber-

squatting claim against Heiss, Dawson and the LLC in Count X of

the amended complaint is denied.

SIGNED this 27th day of March, 2013.

/s/
RICHARD W. ROBERTS
United States District Judge