Devil's Advocate, LLC v. Zurich American Insurance Company
666 F. App'x 256
| 4th Cir. | 2016Background
- Toothman (founder of Devil’s Advocate) sent Zurich a blank Billing Agreement and a Proposal in Nov. 2010 offering expert-billing-review services at ~2.1% of reviewed fees; Zurich never signed any agreement or accepted the Proposal.
- Zurich needed court approval to designate Toothman as a late expert in underlying Texas litigation; disclosure/designation was a condition precedent to retention.
- Toothman sent a later Billing Agreement with a fixed flat fee and invoices; he later asserted designation triggered payment, then sued after Zurich withdrew the designation and declined to retain him.
- Appellants sued in Virginia and later in federal court alleging breach of contract, unjust enrichment, conversion (name/reputation), unauthorized use of name, trademark infringement, and copyright infringement.
- District court dismissed several claims under Rule 12(b)(6), granted summary judgment for Zurich on remaining claims, and denied leave to amend; the Fourth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Unjust enrichment (VA) | Appellants conferred benefits during proposal process and Zurich retained/use of materials implies unjust enrichment | Only preliminary, gratuitous materials were exchanged; no benefit accepted payment-obligation; designation was condition precedent | Dismissed: Plaintiffs failed to plead actual benefit conferred plausibly |
| Unauthorized use of corporate name (Va. Code § 8.01‑40) | Devil’s Advocate asserted Zurich used its corporate name without consent | Statute applies only to natural persons; corporate entity not covered | Dismissed: statute inapplicable to corporate name |
| Unauthorized use of personal name (Va. Code § 8.01‑40) | Toothman argued disclosure/filing used his name for trade/advertising | Zurich used name in litigation context, not advertising or solicitation | Dismissed: use was not advertising/for trade |
| Lanham Act trademark claim (limitations) | Trademark claim timely under property/statute-of-limitations theory | Lanham Act uses analogous state-law limitations—here analogous to fraud (2‑year) | Dismissed as time‑barred under two‑year period |
| Copyright infringement (Proposal v. expert designation) | Proposal was copied into Zurich’s designation / filings | Documents differ in objective content and "total concept and feel"; no substantial similarity | Dismissed: no extrinsic or intrinsic substantial similarity |
| Breach of contract | Zurich’s designation/use of name manifested acceptance; implied contract formed | No meeting of minds; explicit rejection/unaccepted fee negotiations; designation was conditional | Summary judgment for Zurich: no enforceable contract formed |
| Conversion (name & reputation) | Toothman’s name is property; Zurich’s use deprived him of control | Toothman consented (knew disclosure/designation was required and permitted disclosure); implied consent bars conversion | Summary judgment for Zurich: consent/implied consent defeated conversion |
| Copyright — resume (fair use) | Resume is copyrighted; reproduction in filing infringes | Use in litigation is fair use: not commercial, factual, no market harm | Summary judgment for Zurich: fair use applied |
| Denial of leave to amend | Plaintiffs argued amendments would cure defects | District court found proposed amendments futile and adding no new facts | Affirmed: denial not an abuse of discretion due to futility |
Key Cases Cited
- King v. Rubenstein, 825 F.3d 206 (4th Cir.) (standard for Rule 12(b)(6) review)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (conclusory pleading insufficient; plausibility standard)
- PBM Prods., LLC v. Mead Johnson & Co., 639 F.3d 111 (4th Cir.) (applying analogous state limitations to Lanham Act claims)
- Building Graphics, Inc. v. Lennar Corp., 708 F.3d 573 (4th Cir.) (elements of copyright infringement and substantial similarity)
- Humphreys & Partners Architects, L.P. v. Lessard Design, Inc., 790 F.3d 532 (4th Cir.) (extrinsic/intrinsic test for substantial similarity)
- Universal Furniture Int’l, Inc. v. Collezione Europa USA, Inc., 618 F.3d 417 (4th Cir.) (courts may grant judgment on extrinsic similarity alone)
- Copeland v. Bieber, 789 F.3d 484 (4th Cir.) (district court may resolve extrinsic similarity)
- Charbonnages de France v. Smith, 597 F.2d 406 (4th Cir.) (when protracted negotiations may create factual question on contract formation)
- Bond v. Blum, 317 F.3d 385 (4th Cir.) (use of copyrighted material in court proceedings may be fair use)
- Matrix Capital Mgmt. Fund LP v. BearingPoint Inc., 576 F.3d 172 (4th Cir.) (standards for denying leave to amend; reasons need not be exhaustively detailed)
- Frank M. McDermott, Ltd. v. Moretz, 898 F.2d 418 (4th Cir.) (amendment properly denied when proposed claim would be subject to dismissal)