United States District Court, D. Colorado
INTERNATIONAL ASSOCIATION OF CERTIFIED HOME INSPECTORS, a Colorado nonprofit corporation, Plaintiff,
HOMESAFE INSPECTION, INC., a Mississippi corporation incorporated in 2003; HOMESAFE INSPECTION, INC., a Mississippi corporation incorporated in 2014; and KEVIN SEDDON, Defendants.
ORDER ON MOTION TO DISMISS
BROOKE JACKSON, UNITED STATES DISTRICT JUDGE
R. Brooke Jackson This matter is before the Court on
defendants HomeSafe Inspection, Inc.'s
(“HomeSafe”) and Kevin Seddon's motion to
dismiss plaintiff International Association of Home
Inspectors' (“InterNACHI”) amended complaint,
ECF No. 23. For the reasons stated below, defendants'
motion to dismiss is GRANTED.
is a Colorado non-profit corporation and trade association
representing more than 20, 000 home inspectors across the
United States. ECF No. 22 at 5. HomeSafe is a Mississippi
corporation that claimed to own the exclusive right to use
infrared technology in home inspections. Id. at 6.
Kevin Seddon is the President and a director of
HomeSafe. Id. at 3. InterNACHI and HomeSafe
first got involved in 2013 after an InterNACHI member
explained to InterNACHI's founder, Nick Gromicko, that he
had been sued by HomeSafe. Id. at 7. HomeSafe had
claimed that it owned a patent giving it the exclusive right
to use infrared technology in home inspections and had sued
the InterNACHI member for ostensibly violating that patent by
using HomeSafe's technology. Id. Mr. Gromicko
contacted Mr. Seddon at HomeSafe about the issue, at which
point Mr. Seddon represented that HomeSafe held patents
giving it the exclusive right to use infrared technology in
home inspections and indicated that HomeSafe would continue
suing home inspectors who used infrared technology in their
inspections. Id. at 8. Following this conversation,
Mr. Gromicko and Mr. Seddon continued to communicate by
email, and InterNACHI alleges that Mr. Seddon continued to
make representations about its patent rights. Id.
Soon thereafter, Mr. Gromicko signed a license agreement on
behalf of InterNACHI with Mr. Seddon, under which InterNACHI
would provide an opportunity for its members to obtain a
license to use HomeSafe's technology. ECF No. 23-6.
State Court Litigation.
January 2015 HomeSafe sued InterNACHI in the circuit court of
Lafayette County, Mississippi. ECF No. 23 at 3. In that suit,
HomeSafe alleged that InterNACHI breached the parties'
license agreement, and it raised claims for violation of the
Mississippi Fair Trade Practices Act, unfair competition,
unjust enrichment, breach of contract, and conversion.
Id. In January 2016 InterNACHI filed an amended
answer and counterclaim against HomeSafe and a third-party
complaint against Mr. Seddon. Id. InterNACHI alleged
that HomeSafe had misrepresented its patent rights to
InterNACHI and its members to induce InterNACHI to enter the
license agreement. ECF No. 23-1 at 13. InterNACHI thus
asserted counterclaims of fraudulent misrepresentation,
negligent misrepresentation, unjust enrichment, declaratory
judgment, and rescission of the contract. Id. at
13-15. Additionally, InterNACHI noted in its amended answer
that although it was not at the time seeking to add a claim
under 18 U.S.C. § 1961 et seq.
(“Racketeer Influenced and Corrupt Organizations
Act” or “RICO”), it was reserving the right
to do so because there “is evidence Plaintiff violated
the federal wire fraud statute” and the federal mail
fraud statute. Id. at 11. Although InterNACHI did
not add a RICO claim in the state court suit, it threatened
to do so again at the close of discovery in May 2016 if the
parties could not reach a settlement. ECF No. 23 at 4.
December 2016 the Mississippi state court granted
HomeSafe's motion for summary judgment on
InterNACHI's counterclaims. ECF No. 23-5. InterNACHI has
admitted that summary judgment was granted because it
“was unable to specifically prove damages under
Mississippi law.” ECF No. 26 at 4. The Mississippi case
is set for trial, and deadlines to assert additional claims
have passed. ECF No. 23 at 4. As such, HomeSafe contends that
the state court order granting summary judgment is a final
adjudication on the merits of InterNACHI's counterclaims.
present suit against HomeSafe and Mr. Seddon, InterNACHI
relies on much of the same factual background as in its state
counterclaims. See ECF No. 22 at 5-12 (recounting
the same background about Mr. Gromicko's and Mr.
Seddon's communications and negotiations leading to a
contract, and relying on the same alleged misrepresentations
about the same HomeSafe patents). Unlike its state
counterclaims, however, InterNACHI's complaint in the
instant case raises claims for RICO violations and conspiracy
to violate RICO (hereinafter, the “RICO claims”).
Id. at 14. InterNACHI also seeks a declaration of
rights and obligations with respect to HomeSafe's patents
and common law rights to infrared technology, and it seeks
injunctive relief from HomeSafe's alleged continued
illegal activity. Id. In support of these claims
InterNACHI alleges that HomeSafe and Mr. Seddon misled
InterNACHI and its members about the technology HomeSafe
owned in an attempt to obtain licensing fees; fraudulently
induced Mr. Gromicko into entering a contract; and conducted
a “continuing pattern of racketeering activity”
by communicating via mail or wire with InterNACHI members to
deceive them into believing that they were required to pay a
licensing fee to use infrared technology and that they would
be sued for using that technology without a license.
Id. at 22, 15. As evidence of such communications,
InterNACHI cites 34 “threatening letter[s]” from
HomeSafe to InterNACHI inspectors between 2008 and 2011.
Id. at 18-24. InterNACHI thus alleges that its
members were injured when they paid license fees to HomeSafe
under false pretenses or when they refused to use infrared
technology out of fear that they would be sued if they did.
Id. These damages are distinct from those alleged in
the Mississippi state counterclaims.
survive a 12(b)(6) motion to dismiss, the complaint must
contain “enough facts to state a claim to relief that
is plausible on its face.” Ridge at Red Hawk,
L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir.
2007) (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 570 (2007)). A plausible claim is a claim that
“allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While
the Court must accept the well-pleaded allegations of the
complaint as true and construe them in the light most
favorable to the plaintiff, Robbins v. Wilkie, 300
F.3d 1208, 1210 (10th Cir. 2002), purely conclusory
allegations are not entitled to be presumed true,
Iqbal, 556 U.S. at 681. However, so long as the
plaintiff offers sufficient factual allegations such that the
right to relief is raised above the speculative level, he has
met the threshold pleading standard. See, e.g.,
Twombly, 550 U.S. at 556; Bryson v.
Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).
raises five reasons to dismiss InterNACHI's
complaint. Because the doctrine of res judicata is
dispositive, I need not discuss HomeSafe's alternative
arguments. HomeSafe seeks to have InterNACHI's claims for
RICO violation, conspiracy to violate RICO, declaratory
relief, and injunctive relief dismissed because they are
barred by res judicata. Since InterNACHI's state
counterclaims were dismissed on summary judgment, HomeSafe
argues that InterNACHI's closely related RICO claims,
which should also have been raised in the state court, must
now be dismissed from federal court.
initial procedural note, HomeSafe's res judicata argument
is premised on matters outside InterNACHI's complaint,
including InterNACHI's counterclaims before the
Mississippi state court and that court's order on summary
judgment. Although InterNACHI has not objected to my
considering these matters, a court generally must convert a
motion to dismiss to a motion for summary judgment when the
court considers “matters outside the pleadings.”
Fed.R.Civ.P. 12(d). However, it need not do so “if it
takes judicial notice of its own files and records, as well
as facts which are a matter of public record. . . . The files
in the state-court disciplinary proceedings and the two prior
cases . . . clearly fall into these excepted
categories.” Rose v. Utah State Bar, 471 F.
App'x 818, 820 (10th Cir. 2012) (citation ...