Source: http://tx.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20191212_0002733.ETX.htm/qx
Timestamp: 2020-04-01 09:29:45
Document Index: 202705760

Matched Legal Cases: ['§ 3', 'art 1', '§ 10', '§ 3', '§ 3', '§ 3']

Pending before the Court is Plaintiff Domain Protection's First Motion for Partial Summary Judgment (Dkt. #123); Plaintiff Domain Protection's Motion for Leave to File One Page of Sur-Sur-Reply Briefing in Support of its First Motion for Partial Summary Judgment (Dkt. #185); Sea Wasp, LLC's Opposed Motion to Supplement its Response to Plaintiff's First Motion for Partial Summary Judgment (Dkt. #319); and Sea Wasp, LLC's Amended Motion to Supplement its Response to Plaintiff's First Motion for Partial Summary Judgment (Dkt. #327). Having considered the motion and the relevant pleadings, the Court finds that each Motion is GRANTED-save the portion of Domain Protection's First Motion for Partial Summary Judgment (Dkt. #123) relating to tortious interference with a prospective contract which is DENIED.
The internet is “an electronic communications network that connects computer networks and organized computer facilities around the world.” See Internet, MERRIAM-WEBSTER, https://www.merriam-webster.com/dictionary/Internet (last visited November 24, 2019). To access a website, users must connect their home computer to the one hosting the site. This is done by typing the website's “Internet Protocol Address” (the “IP Address”)-a string of numbers that identifies the computer where the website is housed-into Internet Explorer or another web browser. See IP Address, TECH TERMS COMPUTER DICTIONARY, https://techterms.com/definition/ip address (last visited November 24, 2019) (listing “67.43.14.98” as an example). Because an IP address may be difficult to remember, website owners typically obtain an alpha-numeric “domain name” that users can type reach to their website and that might be easier to remember, such as “google.com.” Put simply, an “IP address, ” is comparable to a nine-digit phone number and a “domain name” is comparable to the name saved on a cell phone for that number.
A party can secure the rights to use a particular domain name in one of two ways. It can register a brand-new domain name with a “registrar, ” the party responsible for maintaining the registration of domain names. Or, it can purchase an existing domain name from the party who has registered that name-also known as the “registrant” or “registered name holder.” Registered name holders can earn money from the domain names in their possession by selling them or directing them to placeholder sites where ads are placed and monetized.
Domain Protection is the registered name holder for over 50, 000 domain names (the “Domain Names”) (Dkt. #123). Sea Wasp is the registrar over those names. This suit concerns whether Sea Wasp is encroaching on Domain Protection's proprietary interest in the Domain Names by turning the executive lock on them, which prevents Domain Protection from selling the Domain Names or updating their registration information. Sea Wasp insists that Domain Protection lacks any proprietary interest in the Domain Names in light of a dispute over their ownership (Dkt. #123, Dkt. #168).
A summary on how Domain Protection came into possession of the Domain Names may be helpful at this point. In February 2014, three parties filed suit in the Northern District of Texas against Jeffrey Baron and one of his companies for misappropriating their domain names. The court found Baron to be a vexatious litigator and, on this basis, appointed a receiver (the “Receiver”) over his assets while the dispute was pending (Dkt. #192). The court also placed assets belonging to Novo Point, LLC (“Novo Point”) and Quantec, LLC (“Quantec”) (collectively, the “LLCs'”), two limited liability companies with ties to Baron (Dkt. #168), in the Receiver's custody. The LLCs' assets included the Domain Names.
On appeal, Baron argued that the court lacked jurisdiction to enter the receivership order, and the Fifth Circuit agreed. This prompted the district court to unwind the receivership (the “Unwind Order”) (Dkt. #54, Exhibit 17). Assets held in Baron's name would be returned to him. But it was not immediately apparent whom to return the LLCs' assets to in light of a dispute over who could properly act for them. Without resolving the dispute, the court directed the Receiver to return the Domain Names to Lisa Katz, the Local Operations Manager for the LLCs. Katz was entrusted to manage the LLCs' assets, including the Domain Names, until the dispute over control of the LLCs was resolved (Dkt. #123; Dkt. #168). Baron-affiliates Mike Robertson and David McNair (the “Baron Affiliates”) tried to induce the registrar over the Domain Names, Fabulous.com (“Fabulous”), into giving them control of the Domain Names anyway. But the Receiver intervened, instructing Fabulous to handover the Domain Names to Katz, pursuant to the Unwind Order (Dkt. #123). Katz then assumed control over the Domain Names.
Katz explains that the LLCs had racked up substantial debt while they were under receivership, prompting creditors to threaten to place the LLCs in bankruptcy for liquidation (Dkt. #123). To prevent this, Katz assigned the Domain Names to Domain Protection, a company where she is also manager. The plan was for Domain Protection to liquidate the Domain Names as needed to pay off the LLCs' debts (Dkt. #123). But Baron had contemporaneously filed suits in Texas and Australia challenging Katz's possession of the LLCs' assets. This prompted Fabulous to place an “executive lock” on the Domain Names while these actions were pending, which prevented Domain Protection from liquidating the Domain Names during the duration of the suits.
Neither suit was successful (Dkt. #123). In August 2017, after the suits had been dismissed, Domain Protection asked Fabulous to restore its access to the Domain Names. Sea Wasp purchased Fabulous roughly at the same time. While the Parties dispute what immediately followed, they agree that, “[a]t least between January 28, 2018 to February 11, 2018, there was not an ‘Executive Lock' on the [D]omain [N]ames.” (Dkt. #42 at p. 1). Domain Protection began managing the affairs over the Domain Names shortly after. It started by replacing Bidtellect as the advertisement revenue manager (the “Advertising Manager”) for the Domain Names on receipt of a “concerning” letter from Bidtellect (Dkt. #123). Bidtellect was apparently exasperated with the series of disputes over the Domain Names and proposed certain non-negotiable terms to continue their contractual relationship. Domain Protection responded by terminating its contract with Bidtellect, contracting with a new Advertising Manager, and updating the registration information for the Domain Names accordingly. This involved updating the Domain Names' “nameserver records, ” which ensured that, when a user typed a Domain Protection domain name in a web browser, the user would be directed to a placeholder website hosted by the new Advertising Manager.
Domain Protection has brought claims against Sea Wasp for tortious interference, civil conspiracy, conversion, and respective violations of the Texas Theft Liability Act and the Stored Communications Act (Dkt. #1). Domain Protection alleges that, by turning the lock back on, Sea Wasp is encroaching on its proprietary interests in the Domain Names since it cannot transfer them or update their nameserver records (Dkt. #1). Sea Wasp, however, insists that it can and must place a lock on the Domain Names while a dispute is pending, citing its obligations as a registrar accredited with the Internet Corporation for Assigned Names and Numbers (“ICANN”). ICANN-registrars must comply with ICANN's Registrar Accreditation Agreement (the “Accreditation Agreement”), which instructs registrars to maintain the status quo once a dispute arises (Dkt. #54, Exhibit 2 at p. 5). According to Sea Wasp, this means that it cannot allow Domain Protection to transfer the Domain Names while a dispute is pending. Domain Protection counters that ICANN's dispute resolution policy requires registrars to transfer domain names on “written or appropriate electronic instruction from [the registrar] to take such action”-even after a dispute has started (Dkt. #54, Exhibit 2 at p. 5) (emphasis in original). Notably, on July 17, 2019, the Court entered a Preliminary Injunction which enjoined Sea Wasp from “interfering with Domain Protection's control over the Domain Names, including its ability to update the nameserver records associated with the Domain Names” (Dkt. #192).
On May 1, 2019, Domain Protection filed Plaintiff Domain Protection's First Motion for Partial Summary Judgment (Dkt. #123). In its Motion, Domain Protection asserts that Sea Wasp “listed itself as the ‘registrar' of tens of thousands of domain names registered to Domain Protection” (Dkt. #123) (citing Exhibit 151). Sea Wasp, Domain Protection continues, then “hijacked all income and email from Domain Protection's domain names and websites by altering the domain names' nameserver records” (Dkt. #123) (citing Exhibit 151). Domain Protection contends that Sea Wasp, as the registrar of the Domain Names, violated certain ICANN rules and thus acted outside of its legal authority (Dkt. #123). In so doing, Sea Wasp allegedly committed conversion, tortious interference, civil conspiracy and respective violations of the Texas Theft Liability Act and Stored Communications Act (Dkt. #123). Domain Protection accordingly has presented the following issue to the Court: Whether a domain name registrar such as Sea Wasp is authorized under the ICANN rules to become involved in purported domain name ownership disputes and to alter a registrant's domain name nameserver records without the registrant's consent (or the order of a court or administrative panel) (Dkt. #123). An affirmative resolution of this issue, Domain Protection contends, will result in a partial summary judgment for Domain Protection as Sea Wasp will consequently have been found to have acted outside the scope of its legal authority as a registrar, thus establishing its liability for the aforementioned causes of action (Dkt. #123). Sea Wasp opposes Domain Protection's Motion (Dkt. #168).
On June 20, 2019, Sea Wasp filed Sea Wasp LLC's Response to Domain Protection, LLC's First Motion for Partial Summary Judgment (Dkt. #168). In its Motion, Sea Wasp avers that Domain Protection is “wrong on the law and material underlying facts are disputed” (Dkt. #168). After reiterating a list of grievances that Sea Wasp holds with Domain Protection's alleged conduct during discovery, as well as enumerating a list of already filed Motions, Sea Wasp provides the following arguments against the Court's granting of summary judgment (Dkt. #168). First, Sea Wasp argues that the Court may not rely on the declaration provided by Katz (“Katz' Declaration”) which Domain Protection relies upon for its Motion for Partial Summary Judgment (Dkt. #168). Specifically, Sea Wasp argues that, because Katz is a fiduciary of Quantec-the LLC from which Katz transferred the Domain Names to Domain Protection-Katz' self-interest “triggers a negative legal presumption that she violated her fiduciary duty in transferring the Quantec assets . . . .” (Dkt. #168). As such, the Court should not give any weight or credence to Katz' Declaration, Sea Wasp argues (Dkt. #168). Sea Wasp also contends that Katz' Declaration is filled with conclusory, ambiguous language that is not tied to demonstrable facts (Dkt. #168). Second, Sea Wasp maintains that Domain Protection has no realistic claim to clear title (Dkt. #168). Accordingly, Sea Wasp claims that “[n]o clear title means no standing and no right of recovery under statute or tort” (Dkt. #168). Third, Sea Wasp demurs that Domain Protection waived its right to recover because: (1) Domain Protection and Schepps have purportedly thwarted the discovery process; and (2) Domain Protection acquiesced to the lock formerly enabled by Fabulous (Dkt. #168). Finally, Sea Wasp claims that under ICANN policy and procedure, Sea Wasp, as registrar of the Domain Names, has effective immunity as a stakeholder (Dkt. #168). This immunity, Sea Wasp continues, exists because Sea Wasp was presented with multiple claims to the Domain Names and thus was permitted to refuse the release of the executive lock under § 3.7 of ICANN Inter-Registrar Transfer Policy (Dkt. #168). Other than its previously mentioned defenses, Sea Wasp does not contest the underlying facts that Domain Protection proffers; namely, that Domain Protection was in possession of the Domain Names, Sea Wasp placed an executive lock on those Domain Names, [1]and, as a result, Domain Protection no longer could access the Domain Names.
On June 27, 2019, Domain Protection filed Plaintiff Domain Protection's Reply in Support of Motion for Partial Summary Judgment (Dkt. #177). In its Reply, Domain Protection provides the following counter-arguments: (1) Sea Wasp offers no legal support for its negative-presumption theory of Katz' Declaration and fails to “point to any relevant part of the declaration that is ambiguous or conclusory”; (2) even if Katz' Declaration was stricken by the Court, Sea Wasp's judicial admissions provide sufficient facts for the Court and Sea Wasp has not controverted any of those facts in its Response; (3) Sea Wasp cannot challenge the assignment of the Domain Names as a third party; rather, that assignment may only be voided “by suit brought by the principal to whom the fiduciary duty is owed”; (4) Domain Protection did not waive its right to recover; and (5) Sea Wasp is mistaken on the law of immunity (Dkt. #177).
Following Domain Protection's Reply, Sea Wasp filed Sea Wasp, LLC's Sur-Reply to Domain Protection, LLC's First Motion for Partial Summary Judgment (Dkt. #179). In its Sur-Reply, Sea Wasp argues that Katz is not a credible witness because Sea Wasp's own witnesses, Jeffrey Rasansky and Christopher A. Payne, provide counter-testimony that they never threatened Quantec with bankruptcy despite Katz' allegations that they did (Dkt. #179). Accordingly, Sea Wasp argues that “no summary judgment may safely be granted based on her [Katz] wounded credibility” (Dkt. #179). Sea Wasp then argues that Nobles v. Marcus, a case Domain Protection relies upon for its argument that only a principal may challenge an assignment, is inapplicable.
On July 10, 2019, Domain Protection filed two motions. First, Domain Protection filed Plaintiff Domain Protection's Motion for Leave to File One Page of Sur-Sur-Reply Briefing in Support of its First Motion for Partial Summary Judgment (Dkt. #185). Second, Domain Protection filed Plaintiff Domain Protection's Sur-Sur-Reply in Support of Motion for Partial Summary Judgment (Dkt. #186). In its substantive Motion, Domain Protection argues that Katz never proclaims in her declaration that Payne and Rasansky threatened to put Quantec into bankruptcy; thus, Domain Protection continues, this defense by Sea Wasp is irrelevant (Dkt. #186). Domain Protection then argues that the Court may not make a credibility determination of Katz' testimony (Dkt. #186).
On November 27, 2019, Sea Wasp filed Sea Wasp, LLC's Opposed Motion to Supplement its Response to Plaintiff's First Motion for Partial Summary Judgment (Dkt. #319). This Motion was followed by Sea Wasp, LLC's Amended Motion to Supplement its Response to Plaintiff's First Motion for Partial Summary Judgment (Dkt. #327) which was filed on December 6, 2019. In its Motions, Sea Wasp argues that “to the extent Plaintiff relies on claimed existing or future damages in its May 1 summary judgment motion [Dkt. #123], those alleged facts are, by judicial notice of the Court's own later order(s), superseded and no long[er] justify, if they ever did, a partial summary judgment” (Dkt. #319). Sea Wasp also claims that: “1) Plaintiff cannot receive more rights than Ms. Katz could give under Judge Sam Lindsay's February 28, 2014, order; and 2) Ms. Katz admits after anything that remained after the creditors were paid was to go back to Quantec” which makes Domain Protection not a “traditional” owner of the Domain Names (Dkt. #319). Further, Sea Wasp argues that Domain Protection cannot prove intent under the Texas Theft Liability Act to appropriate Domain Protection's property because Sea Wasp relied upon the advice of legal counsel (Dkt. #319). Finally, Sea Wasp argues that because Katz “could not quantify any damages, needs weeks or months to ‘research' the matter, and couldn't provide any documentation for [her] assertions, ” Katz' uncertainty does not support a “conclusive resolution of fact issues relating to ownership or possessory rights at the summary judgment stage” (Dkt. #319).
With all relevant facts now before the Court, the Court proceeds to Domain Protection's Motion for Partial Summary Judgment.
The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Summary judgment is proper under Rule 56(a) of the Federal Rules of Civil Procedure “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute about a material fact is genuine when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). Substantive law identifies which facts are material. Id. The trial court “must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment.” Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981).
The party seeking summary judgment bears the initial burden of informing the court of its motion and identifying “depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials” that demonstrate the absence of a genuine issue of material fact. Fed.R.Civ.P. 56(c)(1)(A); Celotex, 477 U.S. at 323. If the movant bears the burden of proof on a claim or defense for which it is moving for summary judgment, it must come forward with evidence that establishes “beyond peradventure all of the essential elements of the claim or defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). Where the nonmovant bears the burden of proof, the movant may discharge the burden by showing that there is an absence of evidence to support the nonmovant's case. See Celotex, 477 U.S. at 325; Byers v. Dall. Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000). Once the movant has carried its burden, the nonmovant must “respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial.” Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248-49). A nonmovant must present affirmative evidence to defeat a properly supported motion for summary judgment. See Anderson, 477 U.S. at 257. Mere denials of material facts, unsworn allegations, or arguments and assertions in briefs or legal memoranda will not suffice to carry this burden. Rather, the Court requires “significant probative evidence” from the nonmovant to dismiss a request for summary judgment. In re Mun. Bond Reporting Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1982) (quoting Ferguson v. Nat'l Broad. Co., 584 F.2d 111, 114 (5th Cir. 1978)). The Court must consider all of the evidence but “refrain from making any credibility determinations or weighing the evidence.” Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).
Domain Protection presents the Court with the following issue: Whether a domain name registrar such as Sea Wasp is authorized under the ICANN rules to become involved in purported domain name ownership disputes and to alter a registrant's domain name nameserver records without the registrant's consent (or the order of a court or administrative panel) (Dkt. #123). Before the Court can proceed to the issue presented, it must first assess the validity of the defenses proffered by Sea Wasp. Namely, Sea Wasp's defenses that: (1) a negative legal presumption applies to Katz' Declaration; (2) there is an issue of title that precludes summary judgment; (3) Domain Protection has waived its right to recover on the Domain Names; and (4) Sea Wasp is immune from liability as registrar of the Domain Names. Only if after addressing each of these arguments the Court finds that Domain Protection's Motion for Partial Summary Judgment may still be considered will the Court then continue to the merits of Domain Protection's Motion.
a. Declaration - Fiduciary Duty & Negative Legal Presumption
An affidavit or declaration should not be accepted as summary judgment evidence under Rule 56 if a court is satisfied that the affidavit or declaration was “submitted in bad faith.” Fed.R.Civ.P. 56(h); see also Modica v. United States, 518 F.2d 374, 376 (5th Cir. 1975) (affirming a finding of bad faith where a store owner's affidavit stated that he had no knowledge of violations of food stamp regulations, although he had admitted such knowledge in earlier administrative proceedings). Further, mere conclusory allegations are insufficient to support, or defeat, a motion for summary judgment. See Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Likewise, unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir. 1994). With that being said, in reviewing all the evidence, including declarations, “a court must draw all reasonable inferences in favor of the nonmoving party, and avoid credibility determinations and weighing of the evidence.” Sandstad v. CB Richard Ellis, Inc., 309 F.3d 893, 896 (5th Cir. 2002) (citing Reeves v. Sanderson Plumbing Prods. Inc., 530 U.S. 133, 149-50 (2000).
In the mix with the determination of whether a declaration was submitted in bad faith, in the present action, is the question of whether a negative legal presumption applies to a fiduciary in the declaration context. Sea Wasp has provided no legal authority for the proposition it espouses other than citing general fiduciary-duty caselaw.[2] The case that Sea Wasp cites for its argument that a negative legal presumption applies is UTSA Apartments, L.L.C. v. UTSA Apartments 8, L.L.C., 886 F.3d 473, 492 (5th Cir. 2018)). UTSA Apartments stands for the basic tenet of law that “where a fiduciary engages in a transaction with a party to whom the fiduciary owes duties, a presumption of unfairness arises, and the burden is placed on the fiduciary to establish that the transaction was fair.” Id. This proposition requires the fiduciary to prove that the transaction he or she engaged in was in good faith and that the transaction was fair, honest, and equitable; it does not stand for the proposition that a fiduciary automatically has a negative legal presumption apply against themselves when proffering declarations. Id. With that being said the Court understands Sea Wasp's argument-even if Sea Wasp cannot corroborate that argument with supporting authorities. Sea Wasp is arguing that, because Katz is a fiduciary of Quantec, and because Sea Wasp believes Katz violated that fiduciary duty, anything that Katz does post-assignment of the Domain Names is tainted. Sea Wasp accordingly believes that Katz must prove that each of her actions are fair, honest, and equitable at every turn-including when she proffers a declaration. That, however, is not the law.
As Nobles v. Marcus makes abundantly clear, “only the person whose primary legal right has been breached may seek redress for that injury.” Nobles v. Marcus, 533 S.W.2d 923, 927 (Tex. 1976)); see also Capozzelli v. Allstate Insurance Company, 2014 WL 786426, at *2 (E.D. Tex. Feb 25, 2014) (quoting Nobles, 533 S.W.2d at 927). For example, Nobles states that a “suit to set aside a deed obtained by fraud can only be maintained by the defrauded party.” Id. (citing Smith v. Carter, 45 S.W.2d 398 (Tex. Civ. App.-Texarkana 1932, writ dism'd)). Here, however, Sea Wasp is attempting to hold Katz to her fiduciary duty-assuming arguendo, for this section of the Court's opinion only, that Katz violated that fiduciary duty-by making her comply with basic concepts of agency law. That is not Sea Wasp's role. Indeed, when a party, such as Katz, assigns assets to another, such as Domain Protection, and that assignment is made without authority, that assignment is voidable, not void. See Reinagel v. Deutsche Bank Nat. Trust Co., 735 F.3d 220, 226 (5th Cir. 2013); see also U.S. v. 422 Casks of Wine, 1 Pet. 547, 550 (1828) (“If that conveyance was fraudulent as to creditors, it was not absolutely void, and only voidable by them.”) (emphasis added). Further, the only party that may elect to void the assignment of assets is the principal. Id. A third party does not have a basis to challenge the validity of an assignment. Id. (“[T]he law is well settled that a stranger to a contract lacks standing to challenge [that] contract.”). Accordingly, Sea Wasp is not entitled to hold Katz to any fiduciary duty that Sea Wasp believes she violated. Rather, Quantec, LLC, an entity who is not a party to the present action, is the only principal who may void Katz' assignment-assuming the assignment is even voidable. Until Quantec does so, which, again, is not an issue before the Court, the Court must presume that the assignment effectuated by Katz is proper. Thus, Sea Wasp's argument must be rejected. Sea Wasp is precluded from imposing upon Katz a negative presumption when Sea Wasp cannot adequately challenge that Katz even violated her fiduciary duty. To allow such a presumption to apply would be to permit Sea Wasp to punish Katz despite Sea Wasp not having the authority to satisfy the foundational requirement for such a presumption: the requirement that a fiduciary duty was actually violated. Sea Wasp's argument surrounding a negative legal presumption therefore fails.
Having considered, and rejected, Sea Wasp's argument that Katz' Declaration should be discarded for her purportedly violating her fiduciary duty to Quantec, the Court next considers whether there is any bad-faith in Katz' Declaration. The Court must also consider whether any statements offered by Katz are merely conclusory such that they may not be considered as evidence.
There are only two arguments offered by Sea Wasp that could support a bad-faith inference: (1) Sea Wasp's negative legal presumption argument; and (2) Sea Wasp's proffered declarations which purportedly contradict Katz' testimony. The negative legal presumption argument has been rejected. Accordingly, absent any further specific argument that Katz' Declaration is tainted by bad faith, the Court finds Sea Wasp's arguments lacking on this front. Merely pointing out that Katz is friends with her attorneys and that she has submitted prior declarations in this case is insufficient to establish bad faith.
Sea Wasp argues next that Katz' credibility has been irreparably wounded such that the Court must discredit her declaration entirely (Dkt. #168). In support of its second argument, Sea Wasp provides the Court with: (1) an excerpt from the May 31 deposition of Katz (Dkt. #179, Exhibit A); (2) a declaration by Jeffrey Rasansky (Dkt. #179, Exhibit B); and (3) a declaration by Christopher A. Payne (Dkt. #179, Exhibit C). In their declarations, Rasansky and Payne unequivocally deny any involvement with Schepps and Katz in creating the liquidation vehicle which came to be known as Domain Protection (Dkt. #179, Exhibit B; Dkt. #179, Exhibit C). Sea Wasp argues that these categorical denials require the Court to strike her “blatantly false” or “materially contested” declaration (Dkt. #179). Sea Wasp's conclusion is faulty in two regards. First, Katz' Declaration does not mention Rasansky or Payne whatsoever (Dkt. #123, Exhibit 18). Second, the Court cannot and will not engage in credibility determinations. See Reeves, 530 U.S. at 149-50; Turner, 476 F.3d at 343; Sandstad, 309 F.3d at 896. When coupled together, these two considerations compel the conclusion that Sea Wasp's declarations do not defeat Domain Protection's declaration. Because Katz does not address the facts that Sea Wasp seeks to poke holes in, Sea Wasp's Response can only be characterized as a general attack on Katz' credibility.
To be sure, Sea Wasp so much as says this when it states: “Their declarations sorely challenge Katz's credibility” (Dkt. #179) (emphasis added), followed by the arguments that “no summary judgment may safely be granted based on her wounded credibility” (Dkt. #179) (emphasis added). The Court will not entertain such an argument.
Even if these declarations were not simply offered as attacks on Katz' credibility, the Court would still be unpersuaded that Katz' Declaration has been fatally wounded. The line of testimony that Sea Wasp is attempting to poke a hole in-namely, which creditors, if any, threatened Quantec, LLC with bankruptcy-is only an ancillary topic; a topic that is even more ancillary given the Court's conclusion in Part 1(b), infra. Moreover, Sea Wasp has not pointed to any specific portion of Katz' Declaration that should be stricken due to Katz' “self-interest” or “wounded credibility” (Dkt. #179). See United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991). Because Sea Wasp provides no specific argument as to why certain portions of the Declaration should be stricken for bad faith, the Court finds that Sea Wasp has not met its burden. Sea Wasp's bad faith/credibility arguments accordingly fail.
ii. Conclusory
Language Second, Sea Wasp states generally that Katz' Declaration is predicated upon “language not tied to demonstrable facts” and thus the Court should “disregard conclusory ambiguous language which [is] not clearly a fact drawn from demonstrable personal knowledge” (Dkt. #168). Sea Wasp argues that Katz' Declaration is conclusory by providing the Court with a conclusory argument. Sea Wasp's argument is not enough to be considered a fully briefed argument that would be proper for the Court to include in its analysis. See United States v. Volksen, 766 F.2d 190, 193 (5th Cir. 1985); Ragland v. Dallas Cty. Cmty. Coll. Dist., 2017 WL 1196863, at *5 (N.D. Tex. Mar. 31, 2017); Kostic v. Tex. A & M Univ. at Commerce, 11 F.Supp.3d 699, 735 (N.D. Tex. 2014) (citing Petrie v. City of Grapevine, 904 F.Supp.2d 569, 585 (N.D. Tex. 2012)). With that being said, the Court has an evidentiary gatekeeping duty and will accordingly review Katz' Declaration sua sponte.
The Court is of the opinion that Paragraphs 6, 15, 37, 47, and 48 of Katz' Declaration (Dkt. #123, Exhibit 18) should be stricken in part as either conclusory or lacking personal knowledge. See Forsyth, 19 F.3d at 1533. Paragraph 6 describes the suits brought by Baron against Katz as vexatious (Dkt. #123, Exhibit 18). To the extent that ¶ 6 relies upon characterizing former lawsuits against Katz, ¶ 6 is stricken. See Forsyth, 19 F.3d at 1533. Paragraph 15 describes Sea Wasp, LLC as a shell entity that was created in mid-2017 (Dkt. #123, Exhibit 18). To the extent that ¶ 15 provides a legal conclusion as to Sea Wasp, LLC's nature-i.e., whether it is a shell entity-¶ 15 is stricken. See Forsyth, 19 F.3d at 1533. Paragraph 37 states:
37. Sea Wasp was informed about Domain Protection's pending sales contracts and acted, expressly, to stop all sales. Sea Wasp clearly knew the results of its actions and that the interference was substantially likely to occur as a result of its conduct and willfully intended to redirect the advertising revenue and interfere with sales of domain names. Sea Wasp also engaged in fraud, falsely representing to me and counsel for Domain Protection that Sea Wasp did not change the nameserver records, and that I still had control of the DNS (i.e., nameserver) records, even after Sea Wasp altered the records and is interfering with my control.
(Dkt. #123, Exhibit 18). Paragraph 37 proclaims that Sea Wasp acted willfully and that it engaged in fraud. Those claims, which are conclusory and legal in nature, are hereby stricken. See Forsyth, 19 F.3d at 1533. Paragraphs 47 and 48 provide:
47. Since sales prices have always substantially exceeded appraised value, the full amount of loss is unknown and irreparable, as there is no way to ascertain what the sales price would have been if Sea Wasp had not prevented the sale of the names. Still, within sixty days, at appraised value, the loss of non-renewing domain names caused by Sea Wasp will exceed a million dollars. Even those partial damages, based on appraised value, in reasonable likelihood cannot be recovered because Sea Wasp is a shell entity with no substantial attachable assets. No. real property owned by Sea Wasp could be located, nor could other attachable assets be identified. The only assets counsel for Sea Wasp could point to are computer servers, which, based upon the information available, appears to have a liquidation value of approximately $20, 000.00.
48. Sea Wasp does not appear to independently provide any service or management. Rather, when asked who was providing support for Sea Wasp, I was told by the Sea Wasp ‘support' that Sea Wasp uses another entity, “DirectNic”, to provide its customer service and programming functions. Sea Wasp does not even appear to have an operations center and lists its address as “3500 N. Causeway Blvd, Suite 160 Metairie, LA 70002”, which is the same address listed for LegisLink, LLC, DNC Holdings, Inc., CCS Computer Consulting and Support, Be Fit Financially, LLC, Women's Financial Solutions Network, domainapps, AmMax Publications, Dotology, and dozens of other entities, including Gulf States Remediation Group, LLC, Landeche Insurance Agency, etc.
To the extent that ¶¶ 47-48 describe Sea Wasp, LLC and imply that it is a shell entity simply by its “appearance” without any express personal knowledge, ¶¶ 47-48 are hereby stricken. See Forsyth, 19 F.3d at 1533. The remainder of Katz' Declaration is permissible summary judgment evidence. See Fed. R. Civ. P. 56; Celotex, 477 U.S. at 323. Having determined that Katz' Declaration is proper summary judgment evidence, the Court turns to Sea Wasp's title argument.
b. Title to the Domain Names
Sea Wasp next argues that Domain Protection's Motion for Partial Summary Judgment is precluded by Domain Protection's inability to establish clear title (Dkt. #168). Absent clear title, Sea Wasp continues, Domain Protection does not have standing to pursue its claims against Sea Wasp (Dkt. #168). Sea Wasp notes that there has been (and continues to be) litigation over the ownership of the Domain Names that it believes Domain Protection should lose-its professed neutrality in the Underlying Dispute apparently notwithstanding. Sea Wasp argues that Katz was merely holding the Domain Names in some nominal capacity for the LLCs and lacked authority to transfer them. The Court disagrees. The Northern District of Texas makes clear that, while disputes over their control were pending, Katz had the “authority to manage the LLCs and their assets” (Dkt. #54, Exhibit 14 at p. 5)-not that Katz was holding the Domain Names nominally. It follows that Katz could dispose of the Domain Names. After all, entities are necessarily run by individuals serving as their agents. See Fields v. State, No. 11-07-00095-CR, 2008 WL 4356367, at *1 (Tex. App.-Eastland 2008, no pet.) (citing Johnson v. State, 606 S.W.2d 894, 895 (Tex. Crim. App. 1980); Manning v. State, 68 S.W.3d 697, 698 (Tex. App.-Corpus Christi 2000, pet. ref'd) (“A person acting on behalf of a corporation, with managerial authority and responsibility over its goods, is the effective owner.”). And the undisputed evidence reflects that Katz transferred the Domain Names in her capacity as an agent for the LLCs' here. In a sworn statement, Katz explains that she transferred the names to pay off the LLCs' creditors.
Additionally, despite all of the litigation concerning the Domain Names, Sea Wasp has not identified a single order finding that the Northern District was wrong to return the Domain Names to Katz or that Katz was wrong to transfer the Domain Names to Domain Protection. And it is surely not the Court's place to decide the outcome of this litigation. See United States v. Tex. Tech. Univ., 171 F.3d 279, 286 (5th Cir. 1999) (discussing “the well-established principle that the federal courts may not issue advisory opinions”). Until a court finds otherwise, the Court must presume that the Northern District properly returned the names to Katz, see Cocke, for Use of Commercial Bank of Commerce v. Halsey, 41 U.S. 71, 87 (1842) (explaining that orders are binding until they are overturned), and that Domain Protection's possession is lawful, see CLIFFORD S. FISHMAN & ANNE T.MCKENNA, 2 JONES ON EVIDENCE § 10:18 (7th ed. 2019) (citing, among other cases, Reiter v. Coastal States Gas Producing Co., 382 S.W.2d 243, 252 (Tex. 1964)) (“A person in possession of property is presumed to lawfully possess it.”).
If the following was insufficient to establish that the question of title is not before the Court, Reinagel seals Sea Wasp's fate. As previously stated, and as argued by Domain Protection in its Reply (Dkt. #177), when a party, such as Katz, assigns assets to another and that assignment is potentially made without authority, that assignment is voidable, not void. See Reinagel, 735 F.3d at 226; see also 422 Casks of Wine, 1 Pet. at 550 (“If that conveyance was fraudulent as to creditors, it was not absolutely void, and only voidable by them.”). The only party that may elect to void the assignment of assets is the principal. Id. A third party does not have a basis to challenge the validity of an assignment. Id. (“[T]he law is well settled that a stranger to a contract lacks standing to challenge [that] contract.”). Thus, Sea Wasp is not the proper party to challenge whether Domain Protection has clear title to the Domain Names. Such arguments accordingly do not defeat Domain Protection's Motion for Partial Summary Judgment.
Sea Wasp's third argument is that Domain Protection has waived any right to recover due to its conduct during discovery and its acquiescence to the executive lock which had formerly been placed on the Domain Names by Fabulous (Dkt. #168). First, Sea Wasp's argues that Domain Protection and Schepps have waived any right to recover due to their “violation of the Court's Scheduling Order, requirement that separate motions to compel be filed, misrepresentations to the Court, and failures to comply with Local Rule AT-3(C) and Texas Rules of Professional Conduct . . . .” (Dkt. #168). Sea Wasp, in support of this argument, cites its Motion for Sanctions and two Motions to Compel (Dkt. #168). The Court has already ruled on those Motions. In so ruling, the Court sanctioned Schepps for his failure to disclose his financial interest, ordered Katz' to appear at her personal and 30(b)(6) depositions, and otherwise denied the requested relief (Dkt. #263; Dkt. #295). The Court does not agree that any such misconduct warrants waiver of Domain Protection's right to potentially secure relief nor merits dismissal. Rather, as stated in its prior opinions, the Court's Orders in Dkt. #263 and Dkt. #295 have adequately addressed any such violations. Nowhere in its opinions did the Court rule that Domain Protection waived its entitlement to seek legal relief (Dkt. #263; Dkt. #295). Thus, no waiver, under Sea Wasp's first argument, has occurred.
Sea Wasp next argues that Domain Protection waived its right to recover due to its acquiescence to the executive lock which had formerly been placed on the Domain Names by Fabulous (Dkt. #168). This argument also fails. As Domain Protection retorts, “[i]t is irrefutable that when Sea Wasp physically took control over registrar functions for Domain Protection's domain names, the domain names were not locked” (Dkt. #177). The Court has recognized this when it outlined the agreed upon facts for its opinion ordering a preliminary injunction:
The Parties agree that: (1) the Domain Names were subject to an executive lock while the suits in Texas and Australia were pending; (2) the executive lock was removed for a (short) period after these suits were dismissed, which allowed Domain Protection to make certain changes to the Domain Names' nameserver records; (3) Sea Wasp reversed the changes and placed the lock back on after the Bankruptcy Court action was initiated; and (4) Domain Protection responded by filing this suit and motion.
(Dkt. #192). Simply because Domain Protection had acquiesced to Fabulous' placement of an executive lock does not permit Sea Wasp to then restore the executive lock and claim innocence. As Katz testified, and Sea Wasp failed to rebut, Sea Wasp did not have the consent or authorization of Domain Protection to place an executive lock on Domain Protection's Domain Names. Consequently, Sea Wasp cannot claim that prior consent equates to current consent.[3] Sea Wasp's arguments surrounding waiver accordingly fail.
d. Immunity Pursuant to ICANN Inter-Registrar Transfer Policy § 3.7
Lastly, Sea Wasp argues that it has effective immunity as a stakeholder because, as a registrar, it was faced with competing claims for the Domain Names and also had evidence of fraud.[4] Sea Wasp holds immunity, according to Sea Wasp, because, pursuant to § 3.7 of the Inter- Registrar Transfer Policy, Sea Wasp was authorized to refuse to release the executive lock on the Domain Names so it could maintain the status quo (Dkt. #168). The Court is unconvinced.
Under ICANN's Inter-Registrar Transfer Policy, the “Registrar of Record may deny a transfer request” when there is a “[r]easonable dispute over the identity of the Registered Name Holder or Administrative Contact” (Dkt. #123, Exhibit 53) (emphasis in original). According to Sea Wasp, this Policy allows it to place an executive lock on the Domain Names-presumably because such a lock prevents Domain Protection from transferring the Domain Names to another registrar.[5] But a dispute over whether Domain Protection is the rightful owner of the Domain Names does not constitute a dispute over “the identity of the Registered Name Holder” (Dkt. #123, Exhibit 53) (emphasis in original). This is evident from ICANN's instruction that, in such a dispute, the registrar “may request ID documents.” See ICANN, ABOUT ID REQUIREMENTS, https://www.icann.org/resources/pages/id-2013-05-03-en (last visited November 24, 2019). This is not a dispute over “the identity” of the Registered Name holder as a result.
Sea Wasp's interpretation of the Inter-Registrar Transfer Policy is too broad, regardless. ICANN's Inter-Registrar Transfer Policy allows the Registrar, Sea Wasp, to prevent Domain Protection from transferring the Domain Names to another Registrar when applicable. It does not allow Sea Wasp to place an executive lock on the Domain Names, which prevents Domain Protection from making any changes to the registration information associated with the Domain Names. After all, there are other, less restrictive ways to prevent domain names from being transferred from one registrar to another other than an executive lock-such as by denying an inter-registrar transfer or imposing a “registrar lock” (Dkt. #60 at p. 16). As Sea Wasp explains, a registrar lock “merely prevents domain names from being transferred to another registrar” without an executive lock's other restrictions (Dkt. #60 at p. 16). In short, if ICANN intended to require registrars to place an executive lock on a domain name while an ownership dispute was ongoing, it would have said so. See, e.g., GoForItEntm't, LLC v. DigiMedia.com L.P., 750 F.Supp.2d 712, 738 n.20 (N.D. Tex. 2010) (discussing a provision allowing a registrar to, “at its sole discretion, suspend [the customer's] ability to use [its]domain name or to make modifications to [its] registration records” once the registrar “is notified that a complaint has been filed with a judicial or administrative body regarding [customer's] domain name”). ICANN does just that in other contexts. ICANN provides that a lock should be placed on a domain name in the course of certain disputes-such as when a claim is filed with ICANN's Uniform Rapid Suspension System (the URS”).[6] See, e.g., ICANN, URS PROCEDURE at p. 7, availableat https://newgtlds.icann.org/en/applicants/urs (last visited November 24, 2019) (explaining that, once a URS complaint is filed, the registrar is to lock the domain names). ICANN “knew how to state clearly” when a lock should be imposed and chose not to require one every time a dispute over a domain name arises. See El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 811 (Tex. 2012) (“[T]hose other contract provisions support our reading of the contract because they show that the parties knew how to state clearly when some risks were not to be assumed by MasTec.”).
The Court notes that Sea Wasp has now added the argument that it is immune due to § 3.7.1 which permits the denial of a transfer request-not the placement of an executive lock-when there is evidence of fraud. This argument, notably, was not raised in Defendant Sea Wasp, LLC's Response in Opposition to Motion for Preliminary Injunction (Dkt. #60). Notwithstanding the novelty of this argument, the Court finds that this argument also fails. Sea Wasp includes one sentence in its Response regarding fraud, which states: “Here, the evidence of fraud in Domain Protection's acquisition of the domain names is overwhelming, and the ownership/control dispute is clear and undeniable” (Dkt. #168). None of this “overwhelming” evidence was provided to the Court.[7] Any attempt to argue that Sea Wasp is immune due to a finding of fraud is inadequately briefed and thus waived as a result. See Audler v. CBC Innovis Inc., 519 F.3d 239, 255 (5th Cir. 2008) (quoting Castro v. McCord, 259 Fed.Appx. 664, 665 (5th Cir. 2007)) (“A party ‘waives an issue if he fails to adequately brief it.'”) (emphasis added).[8] Sea Wasp's immunity argument is accordingly denied.
Having resolved the preliminary defenses to summary judgment, the Court now turns to the merits of Domain Protection's Motion for Partial Summary Judgment.
II. The Internet Corporation for Assigned Names and Numbers Uniform Domain Name Dispute Resolution Policy
Before the Court can address the issue presented by Domain Protection, it must determine the evidence it will consider. The Court will then address the merits of Domain Protection's Motion.
Rule 56(c) provides that: