United Supreme Council, 33 Deg v. United Supreme Council

Court of Appeals for the Fourth Circuit·Decided October 30, 2019·No. 18-2034·Unpublished

Opinion

UNPUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 18-2034

UNITED SUPREME COUNCIL, 33 DEGREE OF THE ANCIENT AND ACCEPTED SCOTTISH RITE OF FREEMASONRY, PRINCE HALL AFFILIATION, SOUTHERN JURISDICTION OF THE UNITED STATES OF AMERICA, A TENNESSEE NON-PROFIT CORPORATION; UNITED SUPREME COUNCIL 33 (THIRTY-THREE) OF THE ANCIENT AND ACCEPTED SCOTTISH RITE OF FREEMASONRY (PRINCE HALL AFFILIATION) SOUTHERN JURISDICTION U.S., GRAND ORIENT AT WASHINGTON, DISTRICT OF COLUMBIA, A DISTRICT OF COLUMBIA NON-PROFIT CORPORATION;

Plaintiffs - Appellants,

v.

UNITED SUPREME COUNCIL OF THE ANCIENT ACCEPTED SCOTTISH RITE FOR THE 33 DEGREE OF FREEMASONRY, PRINCE HALL AFFILIATED, A DISTRICT OF COLUMBIA NON-PROFIT CORPORATION; RALPH SLAUGHTER; JOSEPH A. WILLIAMS; MICHAEL A. PARRIS,

Defendants - Appellees.

Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O’Grady, District Judge. (1:16−cv−01103−LO−IDD)

Argued: September 18, 2019 Decided: October 30, 2019

Before MOTZ, HARRIS, and QUATTLEBAUM, Circuit Judges.

Affirmed by unpublished opinion. Judge Harris wrote the opinion, in which Judge Motz and Judge Quattlebaum joined.

ARGUED: Richard Carnell Baker, BAKER SIMMONS, ATTORNEYS AT LAW, Washington, D.C., for Appellants. Jalil Devon Dozier, DOZIER LAW FIRM PLLC, Washington, D.C., for Appellees. ON BRIEF: Amanda R. Ledford, Ryan C. Weir, DOZIER LAW FIRM PLLC, Washington, D.C., for Appellees.

Unpublished opinions are not binding precedent in this circuit.

PAMELA HARRIS, Circuit Judge:

This case stems from an internal dispute within a fraternal order of Freemasons, which caused a faction of the order to break off and start its own masonic organization. The original organization – the plaintiffs here – are United Supreme Council, 33 Degree of the Ancient and Accepted Scottish Rite of Freemasonry, Prince Hall Affiliation, Southern Jurisdiction of the United States (“USC-SJ I”) and its Washington, DC-based predecessor, United Supreme Council 33 (Thirty-Three) of the Ancient and Accepted Scottish Rite of Freemasonry (Prince Hall Affiliation) Southern Jurisdiction U.S.A., Grand Orient at Washington, District of Columbia (“Grand Orient”). These two plaintiffs brought suit against the new organization, which had incorporated under the name United Supreme Council of the Ancient Accepted Scottish Rite for the 33 Degree of Freemasonry, Southern Jurisdiction, Prince Hall Affiliated, as well as three individual defendants, former members who had defected to the new organization (together, “USC-SJ II defendants” or “defendants”). The plaintiffs’ theory is straightforward: Their suit asserted various claims that, at bottom, allege that USC-SJ II was unlawfully holding itself out as an extension of the plaintiffs’ organization.

Two decisions of the district court are now on appeal. First, the district court granted the defendants’ motion to dismiss the plaintiffs’ fraud claim. On the undisputed record facts, the district court concluded, the plaintiffs had not established reliance on any of the defendants’ alleged misstatements as necessary for a fraud claim. We agree that the plaintiffs did not adequately plead reliance, and affirm. Second, the district court granted summary judgment in favor of the defendants as to the remaining claims, holding that both

USC-SJ I and Grand Orient lacked standing and that, in the alternative, their claims would fail on the merits. Although we believe the district court erred in holding that Grand Orient lacked standing, we agree with its resolution on the merits and affirm the court’s judgment on those grounds.

I.

A.

The defendants in this case were members of the plaintiffs’ organization when, in 2015, they learned of allegations that the organization’s leadership was misappropriating funds. In response, they attempted to gain control of the organization, voting to replace the existing leadership at an annual meeting. When this effort fell short, the defendants withdrew from the organization altogether. Six days later, they incorporated a new organization in the District of Columbia under the name “United Supreme Council of the Ancient Accepted Scottish Rite for the 33 Degree of Freemasonry, Southern Jurisdiction, Prince Hall Affiliated,” J.A. 106 – a name that the plaintiffs assert is undeniably similar to their own. Afterwards, the plaintiffs allege, the defendants attempted to induce members to switch allegiances, in part by misrepresenting their splinter group as a legitimate extension of the plaintiffs’ organization.

The plaintiffs, USC-SJ I and Grand Orient, then sued the USC-SJ II defendants for their purported misrepresentations and related wrongful acts. Their complaint asserted multiple claims, including state common-law claims for fraud, tortious interference with contract, and unfair competition, and federal claims for copyright and trademark

infringement. Because much of the complained-of conduct occurred in Virginia, in what the plaintiffs allege was an effort to target their Virginia membership, the plaintiffs filed their complaint in federal district court in that state.

B.

The USC-SJ II defendants first moved to dismiss the plaintiffs’ complaint for failure to state a claim. The district court granted the motion with respect to the fraud claim, finding that the plaintiffs had failed to plausibly allege the legal elements of fraud. United Supreme Council, 33 Degree of the Ancient & Accepted Scottish Rite of Freemasonry, Prince Hall Affiliation, S. Jurisdiction of the U.S. v. United Supreme Council of the Ancient Accepted Scottish Rite for the 33 Degree of Freemasonry, S. Jurisdiction, Prince Hall Affiliated, No. 1:16-CV-1103, 2017 WL 1179155, at *4–5 (E.D. Va. Mar. 28, 2017) (United Supreme Council I). 1 Under Virginia law, the district court explained, the plaintiffs’ state law claim for fraud requires: (1) a false representation, (2) of a material fact, (3) made intentionally and knowingly, (4) with intent to mislead, (5) reliance by the party misled, and (6) resulting damage to the party misled. See id. at *4 (citing State Farm Mut. Auto. Ins. Co. v. Remley, 270 Va. 209, 218 (2005)). The district court questioned whether any of those elements had been satisfied, but focused particularly on the reliance prong, concluding that the plaintiffs “do not allege at any point that they believed in the

1 The district court also dismissed the plaintiffs’ claims for conspiracy and conversion. The plaintiffs do not appeal those dismissals, and we do not discuss those claims further.

legitimacy of USC-SJ II, and therefore they could not have reasonably relied on [the USC- SJ II defendants’] assertions of authority.” Id. at *5.

Following months of discovery, the USC-SJ II defendants filed a motion for summary judgment, seeking judgment in their favor on the remaining claims and also challenging the standing of USC-SJ I and Grand Orient to bring those claims. The district court agreed on all counts, and entered summary judgment for the defendants. United Supreme Council, 33 Degree of the Ancient & Accepted Scottish Rite of Freemasonry, Prince Hall Affiliation, S. Jurisdiction of the U.S. v. United Supreme Council of the Ancient Accepted Scottish Rite for the 33 Degree of Freemasonry, S. Jurisdiction, Prince Hall Affiliated, 329 F. Supp. 3d 283, 288–96 (E.D. Va. 2018) (United Supreme Council II).

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