Fenwick v. Duruman

Full title: JOSHUA FENWICK, individually and on behalf of PRO-NRG, LLC, a New Jersey…

Court: UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

Date published: Mar 20, 2015

Facts

This case arises out of a joint business venture entered into by Fenwick and Eddie Dukhman (“Dukhman”) to manufacture, market, and sell a high-protein, non-milk-based energy drink called PRO-NRG. (Am. Compl. ¶ 12, 17). After developing a business plan and deciding that they would form a company called PRO-NRG, LLC, which would own the PRO-NRG drink. Fenwick and Dukhman recruited Joseph Rasa (“Rasa”) as General Counsel in April 2011 and requested that he incorporate their company. (Am. Compl. ¶¶ 15, 18-19.) Rasa did so on June 7, 2011. (Am. Compl. ¶ 22.)

Due to Dukhman’s criminal background, Dukhman enlisted his sister, Helen Khorosh (“Khorosh”), to serve as his representative within PRO-NRG, LLC. (Am. Compl. f 21.) The PRO-NRG, LLC certificate of incorporation therefore lists Rasa, Fenwick, and Khorosh as the managing members of PRO-NRG, LLC, and Khorosh’s name is used in place of Dukhman’s on all of the LLC’s formation documents. (Am. Compl. ¶¶ 21-23.) Plaintiff alleges that Khorosh had no involvement in the development of PRO-NRG or PRO-NRG, LLC and that her role was strictly limited to acting as Dukhman’s representative. (Am. Compl. ¶ 24.)

To promote their new energy drink, Fenwick contacted Brandon Jacobs (“Jacobs”), a professional football player, who entered into an Endorsement Agreement with PRO-NRG, LLC in August 2011. (Am. Compl. ¶ 25.) Around September 30, 2011, Fenwick, Khorosh (on behalf of Dukhman), Rasa, and Jacobs on behalf of a company he owns called Brayden Enterprises, LLC (“Brayden”) executed an Operating Agreement for PRO-NRG, LLC (the “Operating Agreement”). (Am. Compl. ¶¶ 26-27.) The Operating Agreement listed Fenwick, Rasa, and Dukhman as members of the Management Committee. (Am. Compl. ¶ 29.) Throughout the next year, Fenwick and Dukhman continued to develop PRO-NRG, producing boxes with Jacobs’ image and manufacturing 8,000 bottles of their energy drink with the name PRO-NRG on the bottles. (Am. Compl. ¶ 34.) In February 2012, Fenwick and Dukhman brought samples of PRO-NRG to gyms and food and nutrition stores, while Fenwick worked on finalizing a PRO-NRG website. (Am. Compl. ¶¶ 36-37.)

Fenwick alleges that, for reasons not disclosed to the Court, since the time Fenwick, Khorosh, and Rasa signed the Operating Agreement, all of the Defendants (but most specifically Dukhman) have engaged in concerted activity to eliminate his interest in the PRO-NRG business. (Am. Compl. ¶ 70.) For example, Fenwick asserts that the Defendants set up a shadow company called Sante Pur Solutions, LLC (“SPS”), naming Rasa as SPS’s agent and Khorosh as the sole member, in an attempt to take ownership of the PRO-NRG drink. (Am. Compl. ¶ 31-32.) PRO-NRG is now allegedly being marketed under the SPS name and all of PRO-NRG, LLC’s assets have been transferred to SPS. (Am. Compl. ¶ 72.) Additionally, Fenwick alleges that Dukhman secretly opened a bank account for PRO-NRG, LLC using a fraudulent copy of the PRO-NRG, LLC Certificate of Formation that listed Dukhman as the sole member and that Dukhman has kept Fenwick from accessing the account. (Am. Compl. ¶¶ 37-43.) Further. Fenwick asserts that Dukhman persuaded Jacobs and various other marketing, manufacturing, and distribution contacts to cease communication with Fenwick regarding PRO-NRG, thereby interfering with his business relationships. (Am. Compl. ¶ 48.) He also alleges that Dukhman and/or his agents changed the login information to Fenwick’s PRO-NRG email and website accounts to deny him access to said accounts, (Am. Compl. ¶¶ 49-50.) Fenwick also maintains that Jacobs and Dutchman’s wife, Tania Patruno (“Patruno”), went on the television show Shark Tank, falsely represented that Patruno had sole authority to determine whether to sell an interest in PRO-NRG, LLC and sold a  30% interest in PRO-NRG. LLC to an investor for $250,000, even though Patrano had no involvement in the development of PRO-NRG or authority to sell the company. (Am. Compl. ¶¶ 64-71.)

Finally, Fenwick alleges that, in March 2012, “one or more” of Dukhman, Rasa, Kfiorosh, Patruno, and Jacobs applied for a Federal Trademark for “PRO-NRG,” fraudulently listing Khorosh as the owner of the trademark when PRO-NRG, LLC owned it. (Am. Compl. ¶ 51.) In support of the trademark application, Khorosh allegedly misrepresented that she used the PRO-NRG mark in commerce, and submitted false specimens of the mark which belonged to PRO-NRG, LLC. (Am. Compl. ¶ 87-88.) The U.S. Patent and Trademark Office granted the PRO-NRG trademark to Khorosh on November 27, 2012. (Am. Compl. ¶ 53.)

Fenwick instituted this action on July 17, 2013, bringing five counts under the Lanham Act, 15 U.S.C.§§ 1051 et seq., and twelve state law causes of action. Defendants filed three separate motions to dismiss [ECF Nos. 13, 17, 18]. On April 29, 2014, the Court granted Defendant Dukhman’s motion, denied the motions of Rasa and Brayden as moot, and dismissed Plaintiff’s complaint without prejudice [ECF No. 26]. Fenwick filed an amended complaint on July 14, 2014 [ECF No. 30]. Defendants then filed the instant motions seeking to dismiss Plaintiff’s amended complaint [ECF Nos, 34-36], 

Issue

Decision

For the reasons set forth above, IT IS on this 20 day of March 2015,

ORDERED that claims against all Defendants are hereby DISMISSED for lack of standing; and it is further

ORDERED that the Dukhman and Rasa motions [ECF Nos. 34, 36] are GRANTED without prejudice on the basis of the standing arguments presented therein; and it is further

ORDERED that the Brayden motion [ECF No. 35] is DENIED as moot; and it is further ORDERED that, to the extent the deficiencies in Plaintiff’s claims can be cured by way of amendment, Plaintiff is granted thirty (30) days to reinstate this matter upon the filing of a Second Amended Complaint, which may also include the amendments set forth in Plaintiff’s motion to file a second amended complaint [ECF No. 43]; and it is further

The Brayden motion does not raise a challenge to Plaintiff’s standing. However, when a plaintiff lacks standing, the Court must dismiss the plaintiff’s claims against all defendants. See, supra, note 5.

ORDERED that, in light of the Court’s dismissal without prejudice, Plaintiff’s motion to file a second amended complaint [ECF No. 43] is moot; and it is further

ORDERED that the Clerk of the Court shall close this matter.

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