Case 1:16-cv-00654-CMH-TCB Document 31 Filed 01/04/17 Page 1 of 12 PageID# 195

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA
(ALEXANDRIA DIVISION)
_______________________________________
)
JOHN BOAL PHOTOGRAPHY, LLC,
)
)
Plaintiff,
)
)
v.
) Case No. 1:16-cv-0654 (CMH/TCB)
)
HANNOVER HOUSE, INC., et al.
)
)
Defendants.
)
_______________________________________)

DEFENDANTS REPLY MEMORANDUM IN SUPPORT OF THEIR

RULE 12(b)(6) MOTION TO DISMISS
Table of Contents

1. Summary of Argument .............................................................................................. 2

2. Defendants Motion to Dismiss is Timely ................................................................. 3
3. Plaintiffs Copyright Claim is Still Defective. .......................................................... 4
4. Plaintiff Fails to Explain Why Arkansas Corporate
Law Governs this Case. ............................................................................................. 6
5. Hannover Houses Officers are Shielded from Individual
Liability, Even if Arkansas Law Applies. ................................................................. 8
a.

Plaintiff Misapplies Basic Corporate Law. ............................................................ 8

b.

Plaintiff Ignores Arkansass Statute Governing Unregistered

Foreign Corporations. .......................................................................................... 10

6. Conclusion ............................................................................................................... 11

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DEFENDANTS REPLY MEMORANDUM IN SUPPORT OF THEIR

RULE 12(b)(6) MOTION TO DISMISS
Defendants Hannover House, Inc. and its CEO, Eric Parkinson, have moved this
Court pursuant to Rule 12(b)(6) to dismiss the two-count Complaint of John Boal
Photography, LLC (Photography LLC or Plaintiff)). Photography LLC has opposed
the Motion (ECF No. 30). Defendants now submit this Reply Memorandum.
1. Summary of Argument
A fundamental misunderstanding of a basic tenet of corporate law permeates
Photography LLCs opposition arguments. A corporation is a separate legal person
created under the laws of any state, and recognized by all other states. Thus, Hannover
House, Inc., shown to be a Wyoming corporation, has the benefits of a corporation in all
legal matters. The same separate legal person status applies to Photography LLC. Even
though Photography LLC now represents in its Opposition Memorandum that it is a
single-member Virginia LLC, it is still a separate entity distinct from the one member.
In the Opposition Memorandum, Photography LLC contends that its Count 2
claim of Copyright Infringement should survive. But the Complaint fails to allege even
the registration of the copyrights. The Memorandum now tells the Court that John Boal,
the sole member of Photography LLC, registered the copyrights in his own name. While
this assertion is outside the four-corners of the Complaint, it still fails to make the
essential allegation that the plaintiff is the owner of the copyrights, and that any

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transfer from Boal to the LLC is in writing. Here the Opposition Memorandum confuses
Boal, an individual, with Photography LLC.
Photography LLC continues in its second argument to misapply Arkansas
corporate law in its claims that Hannover House, Inc.s CEO should be held individually
liable on both Count 1 (the $1000 contract claim) and Count 2 (the $2.2 million
Copyright infringement claim). The misguided argument is traced to Photography LLCs
reliance on Arkansas Code 4-27-1501, a corporate statute that requires foreign
corporations to register with the Arkansas Secretary of the State. The argument
inappropriately borrows a remedy from another part of the Arkansas Corporation Act,
and thus spins a false argument of individual liability for a corporate officer.
In this Reply Memorandum, Defendants first summarize the core tenet of
corporate law that seems to be forgotten. The Reply argument then turns to the Copyright
Act requirements for registration and ownership of the copyright. The third section
exposes Photography LLCs misapplication of Arkansas corporate law.
The conclusion is that the Complaint is legally flawed the Copyright Infringement
claim in Count 2 fails as it is currently stated, and the Complaint fails to allege facts that
would make CEO Parkinson individually liable on either count.
2. Defendants Motion to Dismiss is Timely
Plaintiffs Opposition leads with the argument that the Defendants Motion to
Dismiss is untimely. See Opposition, at 1-2 (ECF No. 30). The Opposition, however,
fails to note that Judge Buchanan granted the Defendants leave to file an appropriate
responsive pleading by December 15, 2016. See Order (Nov. 21, 2016) (ECF No. 17).
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The Defendants met that deadline by filing an Answer and the pending Motion to
Dismiss on December 15th.
Further, this court has the discretion to hear motions under Fed. R. Civ. P. 12(b)
according to a reasonable timeline because there is no deadline for filing such motions set
in Rule 12. Therefore, Plaintiffs characterization of the motion as untimely is
inaccurate.
3. Plaintiffs Copyright Claim is Still Defective.
The Complaint fails to allege that the copyrights in question were ever registered.
In the Factual Allegations section of the Complaint running from 11 to 21, there is no
discussion, and indeed no mention, of any copyright registration. Photography LLC
provides details of its communications regarding the $1000 claim for taking the movie
premier pictures, but remains totally silent on any registration of the copyright tied to the
images in question.
When confronted with this hole in the Complaint, Photography LLC responds that
it is public record the photographs are registered to plaintiffs sole member/owner, John
Boal Opp. Memorandum at 3. Using this as its base, Photography LLC argues that
the law does not require a person claiming a copyright or infringement thereof to
register it. Id. This argument twice misses the point. The Complaint must allege
copyright registration, and if the plaintiff is someone other than the registrant, there must
be an express allegation of ownership.
The copyright registration requirement comes directly from the Copyright Act.
This statute requires copyright holders to register their works before suing for copyright
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infringement. 17 U.S.C. 411(a). See also Reed Elsevier, Inc. v. Muchnick, 559 U.S.
154 (2010). While legal scholars might argue whether this is a jurisdictional requirement
or a precondition, the bottom line is that a plaintiff making a copyright claim must allege
registration. Photography LLC fails to do this.
Copyright registration, however, is not the only requirement. In 2010, the Fourth
Circuit instructed that [a] plaintiff claiming copyright infringement must establish
ownership of the copyright by the plaintiff and copying by the defendant. Universal
Furniture Intl, Inc. v. Collezzione Europa USA, Inc., 618 F.3d 417 (4th Cir. 2010)
(quoting Keeler Brass Co. v. Continental Brass Co., 860 F.2d 1063, 1065 (4th Cir.
1988)). 1 The Plaintiff makes no allegation of any assignment or transfer of the
copyrights from John Boal (the individual) to Photography LLC. That Boal may have
registered, and therefore presumptively owns the copyrights, does not place the
copyrights under the ownership of Photography LLC. This directs the argument back to
the core point that Plaintiff fails to recognize that a corporation (here, an LLC) is a legal
entity separate from the officers and owners. We are left with the claim in the Opposition
Memorandum that John Boal assigned his interest and rights to Photography LLC. See
Opp. Memorandum at 3. If this is in fact true, Plaintiff still must allege so in its
Complaint.

In Feist, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991), the U.S. Supreme Court
held [t]o establish infringement, two elements must be proven: (1) ownership of a valid
copyright, and (2) copying of constituent elements of the work that are original.
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Looking ahead, a bald assertion of copyright assignment will not suffice. Under
17 U.S.C. 204(a), the transfer of one or more of the exclusive rights of copyright
ownership by assignment or exclusive license is not valid unless an instrument of
conveyance, or a note or memorandum of the transfer, is in writing and signed by the
owner of the rights conveyed or such owners duly authorized agent. 17 U.S.C.
204(a). This requirement is more than an evidentiary function. Under 204 (a), a
transfer of copyright is simply not valid without a writing. See, e.g., Lyrick Studios, Inc.
v. Big Idea Productions, Inc., 420 F.3d 388, 391-32 (5th Cir. 2005) (discussing the
importance of a writing to transfer copyright).
Photography LLCs vague assertion of assignment of copyright in the Opposition
Memorandum would still leave its Copyright Infringement claim exposed to dismissal.
The Complaint would have to allege a writing signed by the owner in which the rights
were conveyed to the LLC. Defendants suspect that there is no such writing. Either way,
Count 2 of the Complaint is currently flawed and should be dismissed with leave to
amend.
4. Plaintiff Fails to Explain Why Arkansas Corporate Law Governs this Case.
In Defendants previous Memorandum in Support of their Motion to Dismiss, they
explained how under both Virginia and Wyoming state law, the Plaintiff has failed to
allege adequate facts to support corporate veil-piercing. See Memorandum in Support of
Motion to Dismiss (ECF No. 25), at pp. 5-7. Plaintiff has offered no contest to this
analysis in its Opposition.

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In its Opposition, however, Photography LLC simply assumes that Arkansas

corporate law governs whether the corporate veil of Hannover House, Inc. may be
pierced. But the plaintiff offers no legal explanation why, other than saying that
Hannover House has an office in Arkansas.
Plaintiff appears to skip entirely past the thorny choice-of-law issues raised by its
veil-piercing claim. Where a veil-piercing case is brought under a federal statute,
[t]here is significant disagreement . . . over whether . . . courts should borrow state law,
or instead apply a federal common law of veil piercing. TAC-Critical Sys., Inc. v.
Integrated Facility Sys., Inc., 808 F.Supp.2d 60, 64 (D.D.C. 2011) (quoting U.S. v.
Bestfoods, 552 U.S. 576, 63 n. 9 (1998)). Multiple approaches have developed in these
cases. One approach is to look only to the state of incorporation, according to the Second
Restatement of Conflict of Laws, 307 (1971): The local law of the state of
incorporation will be applied to determine whether piercing the corporate veil is
justified. See, e.g., Moran v. Harrison, 91 F.2d 310 (D.C. Cir. 1937) (following
Restatement 307 on corporate veil-piercing claim); S.E.C. v. Levine, 671 F.Supp.2d 14,
33 (D.D.C. 2009) (same).
Another approach is to apply federal common law in deciding whether to pierce
the corporate veil if the decision implicates an important federal interest. See, e.g.,
Equal Rights Center v. Equity Residential, Civil No. CCB-06-1060, 2016 WL 1258418,
at *3-4 (D. Md. Mar. 31, 2016). See also Thomas v. Peacock, 39 F.3d 493, 503 (4th Cir.
1994), revd on other grounds, 516 U.S. 349, 353-54 (1996) (adopting federal common
law rule of veil piercing in ERISA enforcement action).
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Count 1 of plaintiffs Complaint asserts a garden-variety, state-law breach of

contract claim. But plaintiff asserted this claim in a Virginia federal court, invoking this
Courts supplemental jurisdiction under 28 U.S.C. 1367. As such, this Court must first
apply Virginia state law to that claim. See, e.g., Bouker v. CIGNA Corp., 847 F.Supp.
337, 338 (E.D. Penn. 1994) (With respect to a supplemental state law claim, federal
courts must apply state substantive law.). 2 And Count 2 is a federal copyright claim,
which clearly invokes this Courts Federal Question jurisdiction, but it is uncertain
whether Wyoming state law, Virginia state law, or Federal common law would apply to
the veil-piercing claim. But what is certain is that Arkansas law would not apply.
5. Hannover Houses Officers are Shielded from Individual Liability,
Even if Arkansas Law Applies.
Assuming arguendo that, somehow, Arkansas law applies to Plaintiffs veilpiercing claims filed in a Virginia federal court, the result would be the same.
a. Plaintiff Misapplies Basic Corporate Law.
Eric Parkinson, as Hannover Houses CEO, has no personal liability for the
corporations acts as alleged in either Count 1 or Count 2 of the Complaint. The
Complaint alleges no facts that warrant veil-piercing. Instead, Photography LLC
misapplies Arkansas corporate law to construct its argument.
A basic tenet of corporate law is that the corporate entity shields the officers,
directors, and shareholders from personal liability. See, e.g., 114 Am. Jur. Proof of Facts

The alleged contract contains no choice of law provision. Since the alleged contract was
performed in Virginia by a Virginia resident, resulting in an alleged harm in Virginia, Virginias
choice of law principles would likely apply Virginia state law to Count 1.
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3d 403 (. . . a corporation is regarded as a separate legal entity, separate and distinct

from its stockholders, officers, and directors, with separate and distinct liabilities and
obligations); 18A Am. Jur.2d, Corporations 157; 18B Am. Jur. 2d, Corporations
1587. It is a nearly universal rule that a corporation and its stockholders are separate
and distinct entities . . . . K.C. Prop. of N.W. Arkansas, Inc. v. Lowell Inv. Partners,
LLC, 280 S.W.3d 1, 15 (Ark. 2008). Exceptions to this protection (referred to as
piercing the corporate veil), are exceptional and should be applied with great caution.
Banks v. Jones, 390 S.W.2d 108, 110 (Ark. 1965).
The only legal citation that Photography LLC offers to support its veil-piercing
claim is Arkansas Code 4-27-204, which provides:
All persons purporting to act as or on behalf of a corporation, knowing
there was no incorporation under this chapter, are jointly and severally
liable for all liabilities created while so acting.
Photography LLC misunderstands this statute. Rather, it applies only to situations
when a person knowingly acts on behalf of a non-existent corporation. It does not apply
to cases of unregistered foreign corporations that exist. And this section does not require
that the incorporation be in Arkansas.
There is no question that Hannover House, Inc., has, at all times relevant to this
case, been fully incorporated and in good standing with Wyoming. Therefore, 4-27204 has no application to CEO Eric Parkinson because Hannover House, Inc. was, and is,
fully incorporated. Indeed, Arkansas is bound under the full faith and credit clause of

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Article IV, Section 1 of the U.S. Constitution 3 to recognize incorporations under the laws
of other states. That the incorporation is in Wyoming and not Arkansas does not expose
Mr. Parkinson to the sanctions of this Arkansas Code section.
b. Plaintiff Ignores Arkansass Statute Governing
Unregistered Foreign Corporations.
While Photography LLC mistakenly trumpets 4-27-204 as the supposed key to
piercing the corporate veil, the Plaintiff utterly fails to acknowledge the Arkansas statute
that expressly governs unregistered foreign corporations within the state: ARK. CODE
ANN. 4-27-1502. This section sets forth the consequences and penalties that may be
levied on an unregistered foreign corporation transacting business in the state penalties
that assessed against the corporation itself. See ARK. CODE ANN. 4-27-1502(a-d) (West
2016). Importantly, there is no sanction within this statute that permits corporate veilpiercing. None.
But most devastatingly to Plaintiffs argument is that this statute expressly
provides that even an unregistered foreign corporation transacting business in the state
retains corporate validity:
The failure of a foreign corporation to obtain a certificate of authority does
not impair the validity of its corporate acts or prevent it from defending any
proceeding in this state.

The U.S. Constitution, Article IV, Section 1 reads:

Full Faith and Credit shall be given in each State to the public Acts, Records, and
judicial Proceedings of every other State. And the Congress may by general Laws
prescribe the Manner in which such Acts, Records, and Proceedings shall be
proved, and the Effect thereof.
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ARK. CODE ANN. 4-27-1502(e) (West 2016).

Thus, the acts of Hannover House, Inc., are still valid, corporate acts under the law
of Arkansas, even if it was not properly registered as a foreign corporation. This result is
compelled by the Arkansas statute. And because Hannover House, Inc.s corporate
validity was not impaired as expressly provided under 4-27-1502(e) Photography
LLCs attempt to pierce the corporate veil collapses as a matter of law. Mr. Parkinson
cannot be held personally liable in this case for the actions of a valid corporation.
Thus, under Arkansas law (and probably the law of every other state in the Union)
the failure of a foreign corporation to register does not pierce the corporate veil
certainly the relevant Arkansas statute imposes no such severe sanction on Eric
Parkinson. All claims against Mr. Parkinson must be dismissed with prejudice.
6. Conclusion
Plaintiff John Boal Photography, LLC, has failed to properly allege a valid claim
of corporate veil-piercing in its Complaint. Therefore, all claims against Defendant Eric
Parkinson must be dismissed with prejudice.
As for the Plaintiffs copyright claim, the Complaint remains defective in failing
to allege the ownership or written transfer of the copyright ownership to the Plaintiff
from Mr. Boal. Therefore, the copyright claim must be dismissed (but admittedly with
leave to amend).

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Respectfully submitted,
HANNOVER HOUSE, INC.
ERIC PARKINSON
By Counsel
/s/ Daniel D. Mauler
James S. Kurz (VSB No. 16610)
Daniel D. Mauler (VSB No. 73190)
Redmon Peyton & Braswell LLP
510 King Street, Suite 301
Alexandria, VA 22314
Ph: (703) 684-2000
FAX: (703) 684-1509
JKurz@RPB-law.com
dmauler@rpb-law.com
Counsel for Defendants

CERTIFICATE OF ELECTRONIC SERVICE

I hereby certify that on January 4, 2017, I filed the foregoing with the CM/ECF
system, which will generate an electronic notice sent to the following counsel of record:
Christina Sirois (VSB No. 84454)
Dan Backer (VSB No. 78256)
DB Capital Strategies, PLLC
203 South Union street, Suite 300
Alexandria, VA 22314T
/s/ Daniel D. Mauler
Daniel D. Mauler (VSB #73190)
Redmon Peyton & Braswell LLP
510 King Street, Suite 301
Alexandria, VA 22314
Ph: (703) 684-2000
FAX: (703) 684-1509
dmauler@rpb-law.com
Counsel for Defendants
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