Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-00333/USCOURTS-azd-2_10-cv-00333-15/pdf.json

Nature of Suit Code: 196
Nature of Suit: Franchise
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

---

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

DLC Dermacare, LLC, 

Plaintiff, 

vs. 

Sixta Castillo, RN, et al., 

Defendants.

No. CV10-00333-PHX-DGC

ORDER 

Defendants Fox Development Company, James E. Fox, and Shannon C. Fox (the 

“Fox Defendants”) move to dismiss Plaintiff’s action against them, with prejudice, 

pursuant to Fed. R. Civ. P. 12(b)(6). Doc. 199. The motion has been fully briefed. 

Docs. 199, 202, 203. Fox Defendants’ request for oral argument is denied because it 

would not aid the Court’s decision. Fed. R. Civ. P. 78(b). For the reasons below, the 

Court will deny the motion to dismiss. 

I. Background.

 Plaintiff DLC DermaCare, LLC filed an initial complaint on February 17, 2010. 

Doc. 1. On July 13, 2011, Plaintiff filed its first amended complaint alleging breach of 

contract, breach of the implied covenant of good faith and fair dealing, misappropriation 

of trade secrets, trademark and service mark infringement, unfair competition, tortious 

interference with contract, civil conspiracy, and defamation. Doc. 184. These allegations 

arose from franchise agreements between Plaintiff and Defendants. Doc. 1, at 2. The 

franchise agreements contain a Limitation of Action clause which provides: 

 

Case 2:10-cv-00333-DGC Document 209 Filed 11/21/11 Page 1 of 3
- 2 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

The parties further agree that no cause of action arising out of or under this 

agreement may be maintained by either party against the other unless 

brought before the expiration of two years after the act, transaction or 

occurrence upon which such action is based or the expiration of one year 1 

(sic) after the complaining party becomes aware of facts or circumstances 

reasonably indicating that such party may have a claim against the other 

party hereunder, whichever occurs sooner, and that any action not brought 

within this period shall be barred as a claim, counterclaim, defense or 

setoff. 

Doc. 199, at 4. 

II. Legal Standard.

 When analyzing a motion to dismiss for failure to state a claim to relief under 

Fed. R. Civ. P. 12(b)(6), the Court must accept all factual allegations of the complaint as 

true and draw all reasonable inferences in favor of the nonmoving party. TwoRivers v. 

Lewis, 174 F.3d 987, 991 (9th Cir. 1999). “[A] complaint cannot be dismissed unless it 

appears beyond a reasonable doubt that the plaintiff can prove no set of facts that would 

establish the timeliness of the claim.” Supermail Cargo, Inc. v. United States, 

68 F.3d 1204, 1207 (9th Cir. 1995) (citing Conley v. Gibson, 335 U.S. 41, 78 (1957)). At 

this stage of the litigation, the Court must resolve any ambiguities in the considered 

documents in the plaintiff’s favor. See Int’l Audiotext Network, Inc. v. AT&T Co., 

62 F.3d 69, 72 (2d Cir. 1995). 

III. Discussion. 

Fox Defendants assert that Plaintiff’s claims are time barred and that Plaintiff has 

therefore failed to state a claim to relief. Doc. 199, at 2. Pursuant to the parties’ 

franchise agreement, Plaintiff must file a claim within one year of becoming aware of 

facts or circumstances reasonably indicating that the claim exists. See Doc. 199, at 4-5. 

Fox Defendants cite email correspondence from Carl Mudd, Plaintiff’s President and 

Chief Executive Officer, to Fox Defendants, dated January 12, 2008. Doc. 199-1. The 

email appears to give notice of termination of the franchise agreement. Fox Defendants 

argue that this email reveals that Plaintiff was aware of the facts or circumstances 

Case 2:10-cv-00333-DGC Document 209 Filed 11/21/11 Page 2 of 3
- 3 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

reasonably indicating that it might have a claim against Fox Defendants prior to 

January 12, 2008, and that Plaintiff’s complaint is time barred because it was filed on 

February 17, 2010, well past the one-year time limit. Doc. 199, at 5. 

 Plaintiff disputes the authenticity of the email and suggests that it has been altered. 

Doc. 202, at 5. Plaintiff also distinguishes pre-termination breach of contract allegations 

addressed in the email from post-termination claims. Plaintiff argues that the email 

containing the termination notice does not indicate that it was aware at that time of Fox 

Defendants’ post-termination conduct giving rise to claims for misappropriation of trade 

secrets, trademark infringement, tortious interference with contract, and civil conspiracy. 

Doc. 202, at 3. Fox Defendants agree that the email did not trigger the one-year time 

limit with respect to the post-termination claims, and ask the Court to dismiss all of 

Plaintiff’s claims arising from alleged pre-termination conduct. Doc. 203, at 3. 

 The timing suggested in the email presented by Fox Defendants contradicts 

Plaintiff’s factual allegations. In both the initial complaint and the first amended 

complaint, Plaintiff claims that it terminated the franchise agreements in March 2009. 

Docs. 1, at 17; 184, at 17 (“On or about March 20, 2009, DermaCare’s bankruptcy 

attorney sent notices to some Franchisees, that the Clinic Franchise Agreements would 

terminate 10 days from the date of the notice . . . . Sometime in March 2009, Dermacare 

terminated the Clinic Franchise Agreements with the other Franchisees.”). At this stage 

of the proceedings, the Court must accept the factual allegations in Plaintiff’s complaint 

as true. Given that the parties dispute the authenticity of the email and that the email 

contradicts Plaintiff’s factual allegations, the Court must resolve the ambiguity in favor 

of Plaintiff. It does not appear beyond a reasonable doubt that Plaintiff can prove no set 

of facts that would establish the timeliness of its claims. 

IT IS ORDERED that Fox Defendants’ motion to dismiss (Doc. 199) is denied. 

 Dated this 18th day of November, 2011. 

Case 2:10-cv-00333-DGC Document 209 Filed 11/21/11 Page 3 of 3