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LeSEA, Inc. v. LeSEA Broadcasting Corp.

United States District Court, N.D. Indiana, South Bend Division

May 10, 2019

LESEA, INC., et al., Plaintiffs,
v.
LESEA BROADCASTING CORPORATION, LESTER SUMRALL, DR. JOHN W. SWAILS III, and EDWARD WASSMER, Defendants. LESEA BROADCASTING CORPORATION, et al. Counterclaim Plaintiffs and Third-Party Plaintiffs,
v.
LESEA, INC., et al., Counterclaim Defendants and Third-Party Defendants.

          OPINION AND ORDER

          PHILIP P. SIMON, JUDGE UNITED STATES DISTRICT COURT

         This is a lawsuit between warring cousins who are fighting over control of a corporation started by their grandfather. The plaintiffs are LeSEA, Inc., Family Broadcasting Corporation, and LeSEA Global Feed The Hungry, Inc., three Indiana nonprofit corporations (collectively “LeSEA”) who have as their president Drew Sumrall, one of the cousins involved in this brawl. Those entities are suing four defendants, including Lester Sumrall, who is the other cousin in this dispute. The gist of the case involves allegations of a wide ranging attempt to steal trademarks and other intellectual property as well as a host of alleged state law violations sounding mostly in conversion and other intentional torts. Defendants have also filed a counterclaim and third-party complaint, neither of which are at issue at this time. [DE 43.]

         For purposes of this motion, there are three principal defendants-LeSEA Broadcasting Corporation, Lester Sumrall, and Dr. John W. Swails, III, and they have each moved to dismiss certain counts of and to strike other portions of the complaint. [DE 28.] To avoid confusion between these similarly named entities, and because it seems that Lester Sumrall's actions (including directing the activities of LeSEA Broadcasting Corporation) form most of the actions that LeSEA complains of, I will refer to the three defendants collectively as Lester Sumrall or at times defendants.

         The thrust of defendants' motion is that LeSEA has failed to adequately plead certain state law claims-defendants do not challenge the federal trademark claims under the Lanham Act. Furthermore, they argue that certain allegations contained within the Amended Complaint are inflammatory and legally irrelevant and should be stricken. But for the reasons discussed below, LeSEA has sufficiently pleaded most of its claims using relevant and permissible facts. But the Amended Complaint is not without deficiencies and accordingly, defendants' motions will be granted in part and denied in part.

         Background

         This is a motion to dismiss, and so I will draw the necessary factual background from LeSEA's Amended Complaint and take all well-pleaded factual allegations therein as true. LeSEA is a Christian non-profit organization based in South Bend, Indiana and with wide-ranging operations. LeSEA was founded by Dr. Lester Frank Sumrall (grandfather of defendant Lester Sumrall) in 1957 and has grown to operate churches, bookstores, a Bible college, a large food and disaster relief operation, as well as a series of television and radio broadcast networks focused on religious programming. [DE 6 at ¶¶ 15-17.] As part of these operations, LeSEA has two registered trademarks LeSEA Global Feed the Hungry, LeSEA Global, as well as common law trademark rights with regard to LeSEA and LeSEA Broadcasting. [Id. at ¶¶ 18-22.]

         The current President and CEO of the LeSEA organization is Drew Sumrall, who, like defendant Lester Sumrall, is the grandson of the organization's founder Dr. Lester Frank Sumrall. Drew Sumrall assumed this role after his father, Peter Sumrall, passed away in December 2015. It is around the same time that the conduct giving rise to this lawsuit began. Shortly after Peter Sumrall's death, his nephew Lester Sumrall began what LeSEA characterizes as his “long pattern of abusive, harassing, and unlawful conduct” against LeSEA and its interests “based on his false claim to be the rightful spiritual and legal heir to LeSEA.” [Id. at ¶ 24.]

         LeSEA alleges that days after Peter Sumrall's passing, Lester Sumrall insisted on calling a meeting of the board of LeSEA Broadcasting for the purpose of naming him president of the organization and threatening legal action if it did not accede to his “bizarre demands.” Months later, having failed to persuade the board, Lester Sumrall met with LeSEA's principal lender in New Orleans, Louisiana and attempted to have the lender exert pressure on LeSEA to install him in a position of power within the LeSEA organization. And when that didn't work, Lester Sumrall began a letter writing campaign demanding Drew Sumrall's resignation and began spreading false allegations concerning LeSEA and its finances to LeSEA's lenders and business associates. [Id. at ¶¶ 27-30.]

         Lester didn't stop there. He filed false liens, initiated and intervened in bad faith in state court litigation, in the name of the estate of his great uncle (the Rev. James H. Murphy) against LeSEA, Drew Sumrall, Peter Sumrall and others. [Id. at ¶¶ 31-34.] He likewise issued and paid for the distribution of press releases designed to spread false information concerning LeSEA and its management. [Id. at ¶¶ 35-38.]

         When those efforts were not successful in obtaining control over the LeSEA organization, Lester Sumrall changed tactics and tried sowing confusion amongst the public by infringing on LeSEA's name and trademarks. Lester Sumrall allegedly changed the name of a corporation he controlled from “Lester Sumrall International, Inc” to “LeSEA Broadcasting Corporation, ” obviously a name similar to LeSEA and one of its lines of business. [DE 6 at ¶ 44.] He further filed five certificates of assumed business names with the Indiana secretary of state which likewise use the name LeSEA in some fashion. [Id. at ¶ 45.]

         Lester's efforts at obfuscation didn't stop there according to the Amended Complaint. Beyond simply registering and assuming these names, LeSEA alleges that defendants took active steps to confuse the public and improperly cast themselves as affiliated with LeSEA. For example, they apparently began using the LeSEA name/trademark to identify themselves on Guidestar.org, “a well-known and heavily utilized website that gathers, organizes, and distributes information about nonprofits to enable users to make better decisions in relation to charitable giving.” [Id. at ¶ 47.] Defendants likewise used the LeSEA name/marks on their website (www.lestersumrall.com) and on Facebook to solicit donations, sell videos, and sell Lester Sumrall's services as a speaker. [Id. at ¶¶ 48-49.] Additionally, and according to LeSEA for no other reason than to intercept donations meant for it, defendants changed the mailing address of one of their entities to P.O. Box 2, South Bend Indiana 46624, which is one digit off from the mailing address (P.O. Box 12, South Bend, Indiana 46624) that LeSEA had been using for more than 50 years. [Id. at 46.]

         Based on this conduct, LeSEA filed a twelve-count Amended Complaint. Defendants have moved to dismiss seven of those counts which are premised on Indiana state law. Specifically, they seek to dismiss Count V - Tortious Interference with Contractual and Business Relationships; Count VII - Deception; Count VIII - Conversion; Count IX - Forgery; Count X - Counterfeiting; Count XI - Theft; and Count XII - Criminal Mischief. LeSEA also initially sought a preliminary injunction based on the Lanham Act trademark claims, but the parties reached an agreement and I entered their stipulation which resolved that issue prior to any decision on the merits. [See DE 27.]

         Discussion

         I. The Motion to Dismiss Counts V, VII, VIII, ...


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