TOUCHLINE VIDEO, INC. v. THE INTERCOLLEGIATE WOMEN'S LACROSSE COACHES ASSOCIATION

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

TOUCHLINE VIDEO, INC., )

)

Plaintiff, )

)

v. ) 1:21-CV-858

)

THE INTERCOLLEGIATE WOMEN’S )

LACROSSE COACHES ASSOCIATION, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

This case is before the court on the motion of Defendant The

Intercollegiate Women’s Lacrosse Coaches Association (“IWLCA”) to

dismiss the claims of Plaintiff Touchline Video (“Touchline”) for

breach of contract and unjust enrichment. (Doc. 14.) The motion

is fully briefed. (Docs. 16, 18.) For the reasons set forth

below, IWLCA’s motion to dismiss will be denied.

I. BACKGROUND

The basic facts alleged by Touchline, taken as true for the

purpose of this motion, are as follows:

Touchline is a Nevada corporation with its principal place of

business in Tennessee. (Doc. 1 at ¶ 1.) It is the nation’s

“largest video production company specializing in youth sports,”

and records thousands of matches from youth sporting events each

year. (Id. at ¶ 9.) IWLCA is a Maryland corporation and is a

professional association comprised of women’s lacrosse coaches

within the National Collegiate Athletic Association and the

National Association of Intercollegiate Athletes. (Id. at ¶ 18.)

Each year, IWLCA hosts a series of recruiting tournaments for high

school lacrosse teams. (Doc. 1-1 at 2.)

Beginning in 2012, IWLCA and Touchline entered into an

agreement for Touchline to provide certain video recording

services for IWLCA’s tournaments. (Doc. 1 at ¶ 10.) In 2018, the

parties extended the original agreement with mutually agreed upon

modifications for an additional five years (the “2018 Agreement”).

(Id. at ¶ 12.) Specifically, Touchline agreed, among other things,

to “provide high quality video recordings of every game played in

each of the Tournaments,” work in a timely and professional manner

“with the online hosting company contracted by IWLCA,” offer some

recordings at a discounted rate to each team participating in one

of IWLCA’s tournaments and who also registered for the “video

choice option,” make the tournaments a ”priority commitment,”

offer preferred discount rates for IWLCA’s tournaments for all of

Touchline’s video packages, and provide a “Highlights Package” to

tournament participants at a rate in Touchline’s discretion. (Id.

at ¶¶ 24a-24e.)

In exchange for those promises, IWLCA agreed, among other

things, to pay Touchline $100 per registered team for Touchline’s

recording services when IWLCA sold its own packages, pay Touchline

$100 for each team that selected the “video choice option,” and

communicate with Touchline in a timely manner. (Id. at ¶¶ 25a-

25c.)

In early 2020, IWLCA’s leadership changed, and tensions

between IWLCA and Touchline began to grow. (Id. at ¶ 13.) IWLCA’s

new leadership began complaining about the terms of the 2018

Agreement and informed Touchline that it was exploring a business

relationship with a recruiting platform company, which would host

IWLCA’s tournament videos. (Id. at ¶ 14.) IWLCA also “proposed

one-sided, unreasonable terms inconsistent with the Parties’

negotiated business agreement.” (Id.) Chief among those

complaints was IWLCA’s allegation that a change in market rates

for video production resulted in Touchline benefitting from an

unfair deal. (Id. at ¶ 36.) IWLCA also complained that it was

not receiving a commission on Touchline’s video sales, which IWLCA

argued had become industry standard. (Id. at ¶ 39.)

IWLCA also introduced a third-party recruiting company,

SportsRecruits, into the parties’ relationship. (Id. at ¶ 42.)

SportsRecruits is a recruiting platform and has its own video

subsidiary, Cross Street Sports. (Id. at ¶ 43.) IWLCA ultimately

asked Touchline to coordinate with SportsRecruits to provide

videos for the 2021 IWLCA tournaments. (Id. at ¶ 42.) Touchline

agreed to operate with SportsRecruits pursuant to the 2018

Agreement but “did not expect or agree that this would be a

permanent modification to the 2018 Contract.” (Id. at ¶ 44.)

In November 2020, IWLCA again contacted Touchline to “confirm

a few of the rights” under the 2018 Agreement. (Id. at ¶ 45.)

IWLCA asserted that, when Touchline sold a “video select option”

recording package to a tournament team, Touchline would receive

$100 and pay IWLCA $200. (Id. at ¶ 46a.) IWLCA also demanded

that if Touchline were to host tournament videos on another site,

it must restrict access to those videos to IWLCA coaches. (Id. at

¶ 46b.) Finally, IWLCA informed Touchline it did not have a

license to provide IWLCA “[t]ournament film to any platform or

company for any additional access beyond IWLCA coaches or for cost

without the IWLCA written permission.” (Id. at ¶ 46c.) This

restriction on where Touchline could post IWLCA film came after

years of Touchline displaying videos on another video hosting

platform, ConnectLAX, with no objection from IWLCA. (Id. at ¶ 48.)

In December 2020, Touchline responded, noting IWLCA’s

concerns and that its goal was to continue their business

relationship. (Id. at ¶ 50.) Touchline also agreed to renegotiate

the 2018 Agreement to ensure that the parties would have a

“positive working relationship into the future.” (Id. at ¶ 51.)

In pursuit of that renegotiation, Touchline provided IWLCA with a

new agreement on December 9, 2020. (Id. at ¶ 52.) That proposed

agreement provided that Touchline would grant IWLCA access to

tournament video recordings and provide a substantial discount to

the players and teams, while maintaining Touchline’s ability to

profit from its work. (Id.) IWLCA rejected the proposed

agreement. (Id. at ¶ 53.) IWLCA proposed its own “addendum” to

the 2018 Agreement, which included a 72-hour video upload

requirement as well as a provision precluding Touchline from using

a third-party platform like ConnectLAX to sell certain IWLCA

tournament videos. (Id. at ¶ 54.) Touchline proposed

modifications to this addendum, but IWLCA seemingly had no interest

in negotiations. (Id. at ¶ 55.)

The relationship between the parties continued to deteriorate

when, on April 5, 2021, IWLCA sent a cease and desist letter to

ConnectLAX, Touchline’s third-party video sales vendor, alleging

trademark infringement stemming from its use of IWLCA trademarks

posted by Touchline on the ConnectLAX platform. (Id. at ¶ 58.)

IWLCA also reiterated its demand for a “market standard” 3-to-5-

day video upload requirement. (Id. at ¶ 62.) Despite IWLCA’s

demands and its cease and desist letter to ConnectLAX, Touchline

continued to assist SportsRecruits with tournament video recording

transfers. (Id. at ¶ 63.) Touchline also made itself available

to the SportsRecruits team to address any questions or issues the

team might have. (Id. at ¶ 64.) Touchline received no additional

compensation for its time and effort supporting SportsRecruits.

(Id. at ¶ 65.)

In September 2021, IWLCA terminated the 2018 Agreement, in

part, because of Touchline’s failure to timely deliver tournament

recordings within the 72-hour timeframe proposed in IWLCA’s 2020

addendum. (Id. at ¶ 68.) According to Touchline, this termination

was the culmination of IWLCA’s scheme to escape its obligations

under the 2018 Agreement. (Id. at ¶ 70.) Touchline contends that

IWLCA forced it to make SportsRecruits a viable platform to take

Touchline’s business and, according to Touchline, wrongfully

terminated the 2018 Agreement based on illegitimate grounds. (Id.)

As a result, Touchline filed the present lawsuit, alleging one

claim for breach of contract stemming from IWLCA’s 2021 termination

of the 2018 Agreement and one claim for unjust enrichment based on

Touchline’s uncompensated assistance with the SportsRecruits

platform.

II. ANALYSIS

This court has diversity jurisdiction pursuant to 28 U.S.C.

§ 1332. (Doc. 1 at ¶ 4.) The court exercises personal jurisdiction

over IWLCA, which has substantial contacts in this district,

including by maintaining a place of business in the district and

purposefully availing itself of the benefits and protections of

the laws of North Carolina by being registered to conduct business

in North Carolina pursuant to a Certificate of Authority for

Nonprofit Corporation. (Id. at ¶¶ 3, 5.) Venue is proper pursuant

to 28 U.S.C. § 1391(b). Further, the parties consented to

jurisdiction and venue in this court in the 2018 Agreement. (Doc.

1 at ¶ 8.). The parties also agreed the 2018 Agreement would be

governed by North Carolina law. (Doc. 1-1 at 5.)

A. Standard of Review

IWLCA moves to dismiss Touchline’s complaint pursuant to

Federal Rule of Civil Procedure 12(b)(6), arguing that Touchline

has failed to state a claim upon which relief can be granted.

(Doc. 14.) A motion to dismiss pursuant to Rule 12(b)(6) is meant

to “test[] the sufficiency of a complaint” and not to “resolve

contests surrounding the facts, the merits of a claim, or the

applicability of defenses.” Republican Party of N.C. v. Martin,

980 F.2d 943, 952 (4th Cir. 1992). To survive such a motion, “a

complaint must contain sufficient factual matter, accepted as

true, to ‘state a claim to relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In considering the

motion, a court “must accept as true all of the factual allegations

contained in the complaint,” Erickson v. Pardus, 551 U.S. 89, 94

(2007) (per curiam), and all reasonable inferences must be drawn

in the plaintiff’s favor, Ibarra v. United States, 120 F.3d 472,

474 (4th Cir. 1997). “Rule 12(b)(6) protects against meritless

litigation by requiring sufficient factual allegations ‘to raise

a right to relief above the speculative level’ so as to ‘nudge[]

the[] claims across the line from conceivable to plausible.’”

Sauers v. Winston-Salem/Forsyth Cty. Bd. of Educ., 179 F. Supp. 3d

544, 550 (M.D.N.C. 2016) (alterations in original) (quoting

Twombly, 550 U.S. at 555). Mere legal conclusions are not accepted

as true, and “[t]hreadbare recitals of the elements of a cause of

action, supported by mere conclusory statements, do not suffice.”

Iqbal, 556 U.S. at 678. In evaluating a Rule 12(b)(6) motion, the

court “generally cannot reach the merits of an affirmative

defense.” Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir.

2007).

B. Breach of Contract

Touchline’s first cause of action alleges breach of the 2018

Agreement. To succeed on a breach of contract claim, a plaintiff

must show “(1) existence of a valid contract, and (2) breach of

the terms of that contract.” Sanders v. State Pers. Comm’n, 677

S.E.2d 182, 187 (N.C. Ct. App. 2009) (quoting Toomer v. Garrett,

574 S.E.2d 76, 91 (N.C. 2002)) (internal quotation marks omitted).

In interpreting contracts, North Carolina courts employ the

following rules of construction:

[T]he goal of construction is to arrive at the intent

of the parties when the [contract] was issued. Where

a [contract] defines a term, that definition is to

be used. If no definition is given, non-technical

words are to be given their meaning in ordinary

speech, unless the context clearly indicates another

meaning was intended. The various terms of the

[contract] are to be harmoniously construed, and if

possible, every word and every provision is to be

given effect.

Singleton v. Haywood Elec. Membership Corp., 588 S.E.2d 871, 875

(N.C. 2003) (quoting Gaston Cnty. Dyeing Mach. Co. v. Northfield

Ins. Co., 524 S.E.2d 558, 563 (N.C. 2000)). “Whether a failure to

perform a contractual obligation is so material as to discharge

other parties to the contract from further performance of their

obligations thereunder is a question of fact which must be

determined by the jury or . . . by the trial court without a jury.”

Combined Ins. Co. of Am. v. McDonald, 243 S.E.2d 817, 820 (N.C.

Ct. App. 1978). Further, “if one party to the contract renounces

it, the other may treat renunciation as a breach and sue for . .

. damages at once, provided the renunciation covers the entire

performance to which the contract binds the promisor.” Cook v.

Lawson, 164 S.E.2d 29, 32 (N.C. Ct. App. 1968) (citing Pappas v.

Crist, 25 S.E.2d 850, 852 (N.C. 1943)). This, too, is a question

of fact to be determined by the jury. Id.

IWLCA argues that the complaint fails to state a breach of

contract claim because Touchline’s ongoing prior breach authorized

IWLCA’s rescission of the 2018 Agreement. (Doc. 15 at 7.) IWLCA

points to Touchline’s “unauthorized sale” of IWLCA’s tournament

videos in the summer of 2021. (Id. at 8.) Specifically, the 2018

Agreement provided that Touchline would offer a collection of

recordings for $300 to each team participating in a tournament

that had registered for the “video choice option” package. (Doc.

1-1 at 3.) For teams that did not select the “video choice option”

package, Touchline agreed to offer a collection of individual game

recordings at Touchline’s prevailing rate. (Id.) Importantly,

however, the 2018 Agreement makes clear that if Touchline desired

to “offer any other video recording or package of any game or

compilation of games from any of the Tournaments at any other rate,

the IWLCA must approve in writing beforehand.” (Id.) IWLCA

alleges that, beyond the “video choice option” package and the

collection of individual game recordings, Touchline started

selling a “Season Pass For All My Teams” package at a rate of

$1,000 to $5,000 depending on the number of teams. (Doc. 15 at

8.) IWLCA, however, did not provide the written consent required

by the 2018 Agreement. (Id.) In support of this argument, IWLCA

directs the court to its September 2021 termination letter sent to

Touchline, Touchline’s response, and IWLCA’s reply. (Docs. 15-2;

15-3; 15-4.)

Although IWLCA’s briefing identifies serious hurdles

Touchline will have to overcome at a later stage in these

proceedings, evidence in support of IWLCA’s response is outside

the purview of the court at the motion to dismiss stage. In

evaluating a motion to dismiss, the court may consider documents

attached to the complaint “as well as those attached to the motion

to dismiss, so long as they are integral to the complaint and

authentic.” Philips v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180

(4th Cir. 2009). A document is not integral to a complaint, even

if the complaint includes a few quotes from and references to the

document, if the claims “do not turn on, nor are they otherwise

based on, statements contained” in the document. Goines v. Valley

Cmty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016). If a court

goes beyond documents attached or integral to the complaint, “it

converts the motion into one for summary judgment. Such conversion

is not appropriate where the parties have not had an opportunity

for reasonable discovery.” E.I. du Pont de Nemours v. Kolon

Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011) (internal citations

omitted).

Here, the document in question is a letter from Touchline’s

former counsel to IWLCA’s counsel after IWLCA informed Touchline

it was terminating the 2018 Agreement. (Doc. 15-3.) Touchline

did not attach the letter to its complaint, and the complaint makes

no reference to the document, does not quote from the document,

and does not rely upon it. While the document may prove integral

to the case at a later stage, it is not integral to the complaint

at this motion to dismiss stage. As such, it is outside the

purview of the court at this time. See Allen v. Atlas Boxing and

Crating, No. 5:18-CV-520-FL, 2019 WL 6481342, at *4 (E.D.N.C. Dec.

2, 2019) (collecting cases and declining to consider documents

attached to the motion to dismiss as they were not integral to and

explicitly relied on in the complaint); Zak v. Chelsea Therapeutics

Intern., Ltd., 780 F.3d 597, 606-07 (4th Cir. 2015) (refusing to

take judicial notice of SEC filings and consider them in

determining a motion to dismiss because the documents “were not

explicitly referenced in, or an integral part of, the plaintiffs’

complaint.”).

Furthermore, Touchline has sufficiently pleaded a claim for

breach of contract. According to the complaint and taking all the

reasonable allegations therein as true, IWLCA and Touchline

entered into the 2018 Agreement and extended it because of amicable

relations between the parties for years. (Doc. 1 at ¶ 23.) This

changed, however, when IWLCA allegedly began making unilateral

modifications to the 2018 Agreement, including a 72-hour video

upload requirement, demanding different rates because the market

rate for video production had changed, and demanding a commission

for each video sold by Touchline. (Id. at ¶¶ 34-36, 38-40.) IWLCA

allegedly rebuked Touchline’s offer to renegotiate the 2018

Agreement (id. at ¶ 52) and unilaterally terminated the 2018

Agreement (id. at ¶¶ 66-70). A unilateral repudiation of the

contract could constitute breach of the 2018 Agreement. See Cook

v. Lawson, 164 S.E.2d 29, 32 (N.C. Ct. App. 1968) (citing Pappas

v. Crist, 25 S.E.2d 850, 852 (N.C. 1943)) (“if one party to the

contract renounces it, the other may treat renunciation as a breach

and sue for . . . damages at once, provided the renunciation covers

the entire performance to which the contract binds the promisor.”).

As such, IWLCA’s motion to dismiss as to Touchline’s breach of

contract claim will be denied.

C. Unjust Enrichment

IWLCA moves to dismiss Touchline’s unjust enrichment claim on

the grounds that the substance alleged is governed by an express

contract claim. (Doc. 15 at 11.) The elements of an unjust

enrichment claim under North Carolina law are: “(1) plaintiff

conferred a measurable benefit to defendant, (2) defendant

knowingly and voluntarily accepted the benefit, and (3) the benefit

was not given gratuitously.” TSC Rsch. LLC v. Bayer Chems. Corp.,

552 F. Supp. 2d 534, 540 (M.D.N.C. 2008). “[M]ore must be shown

than that one party voluntarily benefited another or his property.”

JP Morgan Chase Bank, Nat’l Ass’n v. Browning, 750 S.E.2d 555, 560

(N.C. Ct. App. 2013). The doctrine of unjust enrichment applies

in “circumstances where it would be unfair for the recipient to

retain [benefits] without the contributor being repaid or

compensated.” Homeq v. Watkins, 572 S.E.2d 871, 873 (N.C. Ct.

App. 2002) (quoting Collins v. Davis, 315 S.E.2d 759, 761 (N.C.

Ct. App. 1984)). “In order to properly set out a claim for unjust

enrichment, a plaintiff must allege that property or benefits were

conferred on a defendant under circumstances which give rise to a

legal or equitable obligation on the part of the defendant to

account for the benefits received.” Id. (quoting Norman v. Nash

Johnson & Sons' Farms, Inc., 537 S.E.2d 248, 266 (N.C. Ct. App.

2000)). A successful unjust enrichment claim must show that, at

the time a payment was made, both parties understood that the

payment was made with an expectation of some service or benefit.

Volumetrics Med. Imaging, Inc. v. ATL Ultrasound, Inc., 243 F.

Supp. 2d 386, 412 (M.D.N.C. 2003) (citing Scott v. United Carolina

Bank, 503 S.E.2d 149, 152 (N.C. Ct. App. 1998)). Further, no

unjust enrichment occurs when the benefit is given without

solicitation or inducement. See Homeq, 572 S.E.2d at 873. A claim

for unjust enrichment cannot survive where an express contract

governs a party’s claim. Booe v. Shadrick, 369 S.E.2d 554, 570

(N.C. 1988).

Touchline bases its unjust enrichment claim on its

interactions with SportsRecruits. (Doc. 1 at ¶ 80.)

SportsRecruits is a recruiting platform and has its own video

subsidiary, Cross Street Sports. (Id. at ¶ 43.) IWLCA allegedly

asked Touchline to coordinate with SportsRecruits to provide video

via SportsRecruits for the 2021 IWLCA tournaments. (Id. at ¶ 42.)

Touchline “was contractually obligated to coordinate with

SportsRecruits” pursuant to the 2018 Agreement; however, Touchline

alleges it “did not expect or agree that this would be a permanent

modification” to the 2018 Agreement without other consideration

and changes. (Id. at ¶ 44.) Between April and June 2021, Touchline

assisted SportsRecruits in uploading video recordings and made

itself available to answer questions from the SportsRecruits team.

(Id. at ¶ 64.) Touchline received no compensation for the time

spent working with SportsRecruits. (Id. at ¶ 65.)

As Touchline notes, an unjust enrichment claim cannot survive

“where an express contract governs the scope of the specific

benefits unjustly conferred.” (Doc. 16 at 16.) The 2018 Agreement

required Touchline to “work in a timely and professional [manner]

with the online hosting company contracted by the IWLCA for

expeditious uploading of Tournament recordings.” (Doc. 1-1 at 3.)

The online hosting company selected by IWLCA was SportsRecruits.

(Doc. 1 at ¶ 42.) Touchline admits in its complaint that it “was

contractually obligated to coordinate with SportsRecruits.” (Id.

at ¶ 44.) While Touchline might be unhappy with the amount of

coordination required to work with SportsRecruits, it nevertheless

agreed to do so in the 2018 Agreement.

However, Touchline’s claim is narrowly saved from dismissal,

because Touchline alleges it provided extra-contractual benefits,

such as transferring videos instead of merely uploading them and

providing consulting support to SportsRecruits “at the request of

IWLCA.” (Id. at ¶ 63.) While the 2018 Agreement covered

Touchline’s work with SportsRecruits, it did so only for the

benefit of “expeditious uploading of Tournament recordings.”

(Doc. 1-1 at 3.) A claim for unjust enrichment for any benefit

beyond that required by the 2018 Agreement would not be preempted

by the presence the contract. At the very least, it is a question

of material fact as to whether the benefits Touchline conferred to

SportsRecruits were extra-contractual. As such, resolution of

this claim at this time would be improper.

IWLCA presents a similar argument that the claim must be

dismissed because there is no evidence that both parties understood

that the benefit was given with an expectation of some service or

payment in return. (Doc. 18 at 9.) However, Touchline’s complaint

alleges that it conducted this additional consulting and

transferring work at IWLCA’s request (Doc. 1 at ¶ 63) and did so

with the expectation that it would be compensated for them (id. at

¶ 82). Whether Touchline can prove that IWLCA also understood

that Touchline would be compensated for its service remains to be

seen. But Touchline has alleged that IWLCA ordered Touchline to

engage in extra-contractual work and that Touchline expected to be

paid for it. Accepting Touchline’s allegations as true, the claim

survives.

IWLCA’s final argument is that the claim should be dismissed

because any benefit conferred was to SportsRecruits and not IWLCA.

This is similarly unpersuasive. A claim for unjust enrichment

does not require the conveyance of a direct benefit. See New

Prime, Inc. v. Harris Transp. Co., No. COA12-271, 729 S.E.2d 732,

2012 WL 3192718, at *4 (N.C. Ct. App. 2012) (“Our holding in the

instant case is in line with the Restatement and other states.

Many jurisdictions do not require that the plaintiff confer a

direct benefit on the defendant in order to recover under a theory

of unjust enrichment.”) (unpublished); Metric Constructors, Inc.

v. Bank of Tokyo-Mitsubishi, Ltd., 72 F. App’x 916, 921 (4th Cir.

2003) (finding plaintiff had produced sufficient evidence that it

conferred a benefit to the defendant, even where the benefit was

conferred to a third party and not directly to the defendant,

because “[u]nder North Carolina law, it is sufficient for a

plaintiff to prove that it has conferred some benefit on the

defendant, without regard to the directness of the transaction.”);

see also, Embree Constr. Grp., Inc. v. Rafcor, Inc., 411 S.E.2d

916, 923 (N.C. 1992) (holding plaintiff’s allegations were

sufficient to form a claim for unjust enrichment where a contractor

completed a project, but the lender, with whom the contractor did

not have a contract, refused to pay). Touchline alleges it made

SportsRecruits “a viable platform” through its consulting work.

(Doc. 1 at ¶ 80.) Certainly, this was a benefit to SportsRecruits.

However, it also benefited IWLCA, as SportsRecruits was the company

IWLCA selected to host all of its videos. To the extent

Touchline’s consulting work improved SportsRecruits’s ability to

provide its service to IWLCA, IWLCA received a benefit from

Touchline’s alleged extra-contractual work. As such, Touchline’s

unjust enrichment claim survives.

III. CONCLUSION

For the reasons stated,

IT IS THEREFORE ORDERED that IWLCA’s motion to dismiss is

DENIED.

/s/ Thomas D. Schroeder

United States District Judge

May 31, 2022