United States District Court, D. Colorado
ORDER DENYING DEFENDANT'S MOTION TO STRIKE
CERTAIN ALLEGATIONS IN COMPLAINT
CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE.
This
matter is before the Court on Defendant The Inspiration
Network, Inc's Motion to Strike Certain Allegations in
Plaintiff FidoTV Channel, Inc.'s Complaint (the
“Motion to Strike”). (Doc. # 20.) The Court
denies Defendant's Motion to Strike for the reasons
described below.
I.
BACKGROUND
Plaintiff provides a cable television channel “on dogs
for dog lovers.” (Doc. # 5 at 1.) Defendant is a media
company that provides operational support, satellite uplink
services, and transponder time to connect channels to cable,
satellite television, and telecom video distributors
throughout the country. (Doc. # 20 at 1.) In February 2015,
Plaintiff and Defendant entered into a Network Operations
Services Agreement (the “Agreement”), the purpose
of which was for Defendant to provide network services to
carry Plaintiff's channel to cable and satellite
television distributors. See (Doc. # 5 at 10-20.)
The
dispute between the parties arises from Plaintiff's
alleged failure to make payments for month 33 (July 2018) and
month 34 (August 2018) under the terms of the Agreement. The
parties disagree on how much Plaintiff owed for these two
months and when payment was due because the Agreement
addresses payment inconsistently in two places-its main terms
and in its Services and Fees Exhibit. See (Doc. # 5
at 11, 19.) The Court need not detail the parties'
factual allegations and the relevant content of the Agreement
for purposes of deciding Defendant's Motion to Strike.
Plaintiff
initiated this action in the District Court for the City and
County of Denver, Colorado, on August 30, 2018.
(Id.) It asserts two claims against Defendant: (1)
breach of contract, and (2) breach of the implied covenant of
good faith and fair dealing. (Id. at 5-7.) Plaintiff
alleges that Defendant issued violated the Agreement and its
implied covenants by issuing “false and misleading
invoices, ” refusing to apply Plaintiff's $100, 000
deposit to cure past due amounts, and by failing to provide
Plaintiff with a reasonable period of time to migrate its
content to another service provider and to inform its
stakeholders that the channel “is going dark.”
(Id.)
On the
same day that Plaintiff filed suit, the Denver District Court
granted Plaintiff a requested ex parte temporary
restraining order that was set to expire on September 13,
2018. (Doc. # 6.) Defendant removed the action to this Court
on September 6, 2018. (Doc. # 1.) On September 7, 2018,
Plaintiff filed with this Court a Motion for an Emergency
Hearing to Extend the Temporary Restraining Order issued by
the state court. (Doc. # 7.) This Court conducted hearings on
Plaintiff's request and its request for preliminary
injunction on September 12 and 28, 2018. (Doc. ## 19, 33.) On
September 28, 2018, the Court ruled that the Agreement was
ambiguous and the parties' intentions at the time of
executing the Agreement were unclear. See (Doc. #
33.) The meaning of the Agreement is therefore for a jury to
decide.
The
Court issued Plaintiff a preliminary junction on September
28, 2018, barring Defendant from terminating service under
the Agreement through November 30, 2018, subject to Plaintiff
posting bond in the amount of $335, 000.00. (Doc. # 34.) The
preliminary injunction expires at 11:50 PM MDT on November
30, 2018. (Id.)
Separately,
on September 20, 2018, Defendant filed the Motion to Strike
now before this Court. (Doc. # 20.) Defendant seeks to strike
three paragraphs from Plaintiff's Complaint (Doc. # 5)
pursuant to Federal Rule of Civil Procedure 12(5).
(Id. at 1.) The following paragraphs are at issue:
12. On September 16, 2016, [Defendant's Chairman and CEO,
David Cerullo], along with another FidoTV Director
representing the American Kennel Club (“AKC”),
which was the largest Series A Preferred Shareholder, without
notice or opportunity to be heard to FidoTV, its CEO or other
Series A Preferred Shareholders, colluded to elect two
additional Directors to the Board of FidoTV - Carl C. Ashby,
III, representing AKC, and Mark A. Kramer, representing
Defendant - thereby increasing AKC's and Defendant's
voting power and influence on the FidoTV Board. . . .
15. Upon information and belief, during the period of May
2017 to October 2017, during which Cerullo and Kramer were
still on the board of FidoTV, a representative of Defendant
provided confidential information that was available only to
Board Members of FidoTV to one or more of FidoTV's
vendors and urged that vendor(s) not to settle a programming
and production dispute with FidoTV. If one or both of
Defendant's Directors knew of and participated in these
actions, upon information and belief it would constitute a
breach of such Director's fiduciary duties to FidoTV and
its shareholders. Upon information and belief, such actions
also would constitute the tortious interference with contract
and prospective business advantage. . . .
28. Upon information and belief, Defendant's actions
described above and its threatened termination of its
Services resulting in the loss of FidoTV's channel are
part of a scheme to gain control of the content and
intellectual property of FidoTV. This belief is supported by
the fact that if Defendant is allowed to terminate its
satellite uplink and transponder services suddenly and cause
the FidoTV channel to go dark, Defendant's 504, 000
Series A Preferred Shares in FidoTV would lose value or
become worthless. Such action by Defendant would be
nonsensical unless it has some ulterior motive for
terminating the FidoTV Channel.
(Doc. # 5 at 2-3, 5); see (Doc. # 20.) Defendant
argues that these paragraphs must be stricken because
“they aver irrelevant, scurrilous conduct by Cerullo,
Kramer, and [Defendant.]” (Doc. # 20 at 3.) Plaintiff
filed its Response on October 11, 2018, arguing that its
allegations in Paragraphs 12, 15, and 28 bear on the
interpretation of the Agreement, affirmative defenses, and
damages, and are not scandalous. (Doc. # 38.) Defendant filed
a Reply in support of its Motion to Strike on October 24,
2018. (Doc. # 40.)
II.
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