Marks v. Channel Control Merchants, LLC

CourtDistrict Court, S.D. Mississippi
DecidedJune 18, 2025
Docket2:24-cv-00082
StatusUnknown

This text of Marks v. Channel Control Merchants, LLC (Marks v. Channel Control Merchants, LLC) is published on Counsel Stack Legal Research, covering District Court, S.D. Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Marks v. Channel Control Merchants, LLC, (S.D. Miss. 2025).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF MISSISSIPPI EASTERN DIVISION

SETH MARKS § PLAINTIFF § § v. § Civil No. 2:24cv82-HSO-BWR § § CHANNEL CONTROL § MERCHANTS, LLC, et al. § DEFENDANTS

MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF SETH MARKS’ MOTION [114] FOR LEAVE TO FILE THIRD AMENDED COMPLAINT AND GRANTING DEFENDANTS STEVEN J. WISCH’S AND GREG PENDER’S MOTIONS [30], [35] TO DISMISS SECOND AMENDED COMPLAINT [23]

Defendants Steven J. Wisch’s and Greg Pender’s Motions [30], [35] seek dismissal of Plaintiff Seth Marks’ claims against them in the Second Amended Complaint [23], specifically claims against Greg Pender for intentional misrepresentation and negligent misrepresentation and against Steven J. Wisch and Greg Pender for tortious interference with contract. Plaintiff Seth Marks has filed a separate Motion [114] for Leave to File Third Amended Complaint. The Court finds that Defendants Steven J. Wisch’s and Greg Pender’s Motions [30], [35] to Dismiss should be granted, and Plaintiff’s Motion [114] for Leave to File Third Amended Complaint should be denied, with leave to reassert as to Defendants other than Steven J. Wisch and Greg Pender. I. BACKGROUND A. Factual Background Plaintiff Seth Marks (“Marks” or “Plaintiff”) alleges that, on February 17,

2021, Rob Lynch (“Lynch”), the former Chief Executive Officer of Defendant Channel Control Merchants, LLC (“Channel Control”),1 offered him the position of the company’s Chief Merchandising Officer, an offer which Plaintiff accepted. See Ex. [23-1] at 1, 5; 2d Am. Compl. [23] at 2. And he claims that “[i]n August of 2022, Defendant supplemented that portion of the parties’ contract that addressed Plaintiff’s compensation under the contract with an express agreement which Defendant’s chief executive officer (‘CEO’) entitled the ‘Seth Marks Compensation

Addendum.’” 2d Am. Compl. [23] at 2; see Ex. [23-2]. After Hilco Global2 acquired a substantial financial interest in Channel Control in “early 2023,” Defendant Greg Pender (“Pender”) was appointed as Channel Control’s new CEO. 2d Am. Compl. [23] at 3. Shortly thereafter, Pender allegedly “advised Plaintiff that Pender and Channel Control Merchants no longer intended to honor Plaintiff’s contractual compensation terms as previously agreed

in the Compensation Addendum.” Id. According to Plaintiff, Defendant Steven J. Wisch (“Wisch”), who had a “substantial membership interest” in Channel Control,

1 Channel Control manages and liquidates excess inventory for retailers and manufacturers and has done business under names such as Dirt Cheap, Treasure Hunt, and Dirt Cheap Building Supplies. See Ex. [50-1] at 2. Its competitors include retail stores such as Bargain Hunt, Ollie’s Bargain Outlet, TJ Maxx, and Ross Stores. See Ex. [23-1] at 6. 2 The original Complaint [1] also named Hilco Global, LLC, as a Defendant and alleged it was a member of Channel Control Merchants, LLC. See Compl. [1] at 2. id. at 2, and Hilco Global “instructed and conspired with Defendant Pender to repudiate Plaintiff’s Employment Agreement and supplemental Compensation Addendum in an effort to increase Channel Control Merchants’ ‘bottom line,’ all at

Plaintiff’s significant expense,” id. at 3. Plaintiff claims that he gave written notice to Pender that his decision on behalf of Channel Control “to refuse to pay Plaintiff what [Channel Control] owed [him] under the parties’ Compensation Addendum, constituted a breach of the parties’ Employment Agreement and the Compensation Addendum.” Id. Rather than cure this breach of contract, “Pender immediately terminated Plaintiff’s employment without ‘cause,’ as that term is defined by the Employment

Agreement.” Id. And Channel Control has allegedly failed to pay Plaintiff the equivalent of six months of his annual base salary, which is purportedly due under the contract. Id. at 4. B. Procedural History Invoking this Court’s diversity jurisdiction, Marks filed a Complaint [1] against Channel Control, Hilco Global, LLC, Pender, and Wisch, see Compl. [1],

followed by an Amended Complaint [7] against Channel Control, Pender, and Wisch, see Am. Compl. [7]. After Channel Control filed a Motion [18] to Dismiss, Marks amended his pleading a second time, which rendered the Motion [18] to Dismiss moot. See 2d Am. Compl. [23]. The Second Amended Complaint [23], which is the operative pleading, asserts claims against Channel Control3 for breach of contract, quantum meruit, promissory estoppel, and unjust enrichment; against both Channel Control and Pender for intentional misrepresentation and negligent

misrepresentation; and against Wisch and Pender for tortious interference with contract. See id. at 5-8. Plaintiff seeks “compensatory damages, extra-contractual damages, punitive damages, special damages, litigation costs, and attorneys’ fees jointly and severally” from Defendants. Id. at 8. Wisch and Pender have filed the present Motions [30], [35] to Dismiss the Second Amended Complaint [23] under Federal Rule of Civil Procedure 12(b)(6). See Mot. [30]; Mot. [35]. Wisch argues that the Second Amended Complaint [23]

“fails to sufficiently allege the elements of Plaintiff’s single claim against [him] (Count VII for tortious interference with contract).” Mem. [31] at 1; see id. at 5. He additionally contends that the claim fails as a matter of law due to his membership interest in Channel Control and direct control over many aspects of its operations. See id. at 1, 6-7. Pender argues that “Plaintiff failed to plead his claims for intentional

misrepresentation and negligent misrepresentation with particularity as required by Rule 9(b),” as the Second Amended Complaint [23] fails to identify the false representation he allegedly made. Mem. [36] at 1; see id. at 4-6. And “[t]he sparse factual allegations about Pender fail to sufficiently plead the elements of any claim

3 Channel Control filed a Suggestion [50] of Bankruptcy on October 17, 2024. See Doc. [50]. Under 11 U.S.C. § 362(a), Channel Control’s bankruptcy petition automatically stayed the continuation of this proceeding as against it. See Text Order, Oct. 17, 2024. against him even under the ordinary pleading standard.” Id. at 1; see id. at 6-7. Pender further maintains that “Plaintiff’s claim for tortious interference with contract fails as a matter of law and does not identify any acts of Mr. Pender,

individually,” and “[c]orporate officers generally are not liable for debts of the company.” Id. at 2; see id. at 7-10. After the Motions [30], [35] to Dismiss were fully briefed, Marks filed a Motion [114] for Leave to File Third Amended Complaint, see Mot. [114],4 seeking to add as new Defendants Hilco Holdings, LLC, Hilco, Inc., Jeffrey B. Hecktman, John Chen, Benjamin Nortman, Evan Behrens, and Bill Cornog, see Mot. [114] at 1; Ex. [114-1] at 1-3. Plaintiff also seeks to add a Count Eight against all Defendants, for

breach of the implied covenant of good faith and fair dealing. See Ex. [114-1] at 9- 10. Wisch and Pender oppose Marks’ Motion [114], arguing that “[d]espite already amending his Complaint twice, Plaintiff’s proposed Third Amended Complaint fails to state a claim against [Wisch or Pender] upon which relief can be granted.” Mem. [118] at 1. Specifically, “Plaintiff has added no new material

allegations to support the misrepresentation claims against Pender or the tortious interference claim” against Wisch and Pender, and “the ‘new’ breach of implied covenant of good faith and fair dealing claim against [Wisch and Pender] fails as a

4 This is actually Marks’ second Motion [114] for Leave to File Third Amended Complaint.

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Marks v. Channel Control Merchants, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marks-v-channel-control-merchants-llc-mssd-2025.