Cornerstone Move Management, LLC v. Paxton

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION - CINCINNATI

CORNERSTONE MOVE : Case No. 1:24-cv-366

MANAGEMENT, LLC,

: Judge Matthew W. McFarland

Plaintiff, :

v

MATT PAXTON, et al.,

Defendants.

ORDER AND OPINION

This matter is before the Court on Plaintiff's Motion to Dismiss Defendant Paxton’s

Counterclaims and Third-Party Complaint (Doc. 21), as well as Plaintiff's Continued

Motion to Dismiss Defendant Paxton’s Amended Counterclaims and Third-Party

Complaint (Doc. 45). This matter is fully briefed and ripe for the Court’s review. (See

Docs. 22, 24, 46-47.) For the following reasons, Plaintiff's Motion to Dismiss Defendant

Paxton’s Counterclaims and Third-Party Complaint (Doc. 21) is DENIED AS MOOT,

and Plaintiff's Continued Motion to Dismiss Defendant Paxton’s Amended

Counterclaims and Third-Party Complaint (Doc. 45) is GRANTED.

BACKGROUND

Plaintiff Cornerstone Move Management, LLC and its affiliate FirstLight Home

Care (“FirstLight”) are involved in a franchised business system to provide downsizing

and moving services. (Second Am. Ver. Compl., Doc. 43, 9-12.) On July 3, 2024,

Plaintiff initiated this federal action “for breach of contract, unfair competition, theft of

confidential information and trade secrets and civil conspiracy arising out of Defendants

[Matt Paxton, Frank Todisco, and Kate Grondin’s] attempts to start a directly competitive

business using data, information, concepts, resources, work product, contacts[,] and

materials that belong to [Plaintiff] and which are the subject of contracts between the

parties in which the Defendants explicitly agreed they would not use for competitive

purposes.” (Id. at J 1; see also Compl., Doc. 1.)

On March 11, 2025, Defendant Paxton filed Counterclaims against Plaintiff, as well

as a Third-Party Complaint against FirstLight. (Counterclaims, Doc. 44.) Plaintiff and

FirstLight ultimately responded by filing a Continued Motion to Dismiss the

Counterclaims and Third-Party Complaint. (Continued Motion, Doc. 45.) Plaintiff has

filed several Amended Complaints in this matter, to which Defendants have responded

by refiling an Answer, Counterclaims, and Third-Party Complaint. For present purposes,

the operative pleadings include Plaintiff's Second Amended Verified Complaint (Doc.

43) and Defendant Paxton’s corresponding Amended Counterclaims and Third-Party

Complaint (Doc. 44), which incorporate previous allegations.

Defendant Paxton brings three claims for relief. (Am. Counterclaims, Doc. 23.) His

first counterclaim alleges fraudulent inducement: Plaintiff “made numerous promises

and representations in order to induce Defendant . . . to engage in the business entity

which is the subject of this action, and which never came to fruition.” (Id. at 4 1-4.) As

for the second counterclaim, Defendant Paxton alleges a constructive discharge based

upon Plaintiff making it “impossible” for him to “discharge his duties.” (Id. at 4 5-7.)

Third, Defendant Paxton alleges breach of contract. (Id. at { 8.) Turning to Defendant

Paxton’s Third-Party Complaint, he alleges that FirstLight should be liable for all

damages because it is an empty shell entity owned and operated by the same individuals

who purport to operate Plaintiff Cornerstone. (Am. Third-Party Compl., Doc. 23, 9 1-4.)

LAW AND ANALYSIS

A Rule 12(b)(6) motion to dismiss for failure to state a claim tests a plaintiff's cause

of action as stated in a complaint. Golden v. City of Columbus, 404 F.3d 950, 958 (6th Cir.

2005); Fed. R. Civ. P. 12(b)(6). A claim for relief must be “plausible on its face.” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007). Courts accept all factual allegations as true and

construe them in the light most favorable to the plaintiff. Doe v. Baum, 903 F.3d 575, 581

(6th Cir. 2018). However, courts are not bound to do the same for a complaint’s legal

conclusions. Twombly, 550 U.S. at 555. This same framework applies when evaluating

whether a counterclaim sufficiently states a claim for relief. Lewandowski v. Deters, No. 22-

CV-106, 2023 WL 6536193, at *2 (E.D. Ky. July 11, 2023) (collecting cases).

IL Fraudulent Inducement Claim

Claims of fraud trigger a heightened pleading standard. “In alleging fraud or

mistake, a party must state with particularity the circumstances constituting fraud or

mistake.” Fed. R. Civ. P. 9(b). “Malice, intent, knowledge, and other conditions of a

person’s mind,” however, “may be alleged generally.” Id. The Sixth Circuit has

understood this mandate to mean that a plaintiff must: “(1) specify the statements that

the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when

the statements were made, and (4) explain why the statements were fraudulent.” Frank v.

Dana Corp., 547 F.3d 564, 570 (6th Cir. 2008) (quotation omitted). This particularity

requirement serves the twin goals of ensuring that defendants are on notice of the alleged

conduct and preventing fishing expeditions. Republic Bank & Tr. Co. v. Bear Stearns & Co.,

683 F.3d 239, 255 (6th Cir. 2012). At the same time, Rule 9(b) “should not be read to defeat

the general policy of simplicity and flexibility in pleadings contemplated by the Federal

Rules.” U.S. ex rel. SNAPP, Inc. v. Ford Motor Co., 532 F.3d 496, 503-04 (6th Cir. 2008)

(quotation omitted).

Plaintiff contends that Defendant Paxton’s fraud claim falls short of Rule 9(b)’s

particularity requirements. (Motion, Doc. 22, Pg. ID 314-16; Reply, Doc. 47, Pg. ID 751-

52.) Ata minimum, Rule 9(b) boils down to specifying the “who, what, when, where, and

how of the alleged fraud.” Sanderson v. HCA-The Healthcare Co., 447 F.3d 873, 877 (6th Cir.

2006) (quoting United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d

899, 903 (5th Cir. 1997)).

The Court begins with the who question. Plaintiff emphasizes that while the

Counterclaims identify three individual principals and a group of alleged

misrepresentations, they fail to indicate which principal made which alleged

misrepresentation. (Reply, Doc. 47, Pg. ID 751-52.) “In a fraud case with multiple

defendants, Rule 9(b) requires that the plaintiff plead specific allegations as to each

defendant’s alleged involvement.” Sugarlips Bakery, LLC v. AGG Franchising, LLC, No.

3:20-CV-830, 2022 WL 210135, at *10 (M.D. Tenn. Jan. 24, 2022) (quotation omitted).

Defendant Paxton’s fraud-based counterclaim involves allegations against a single

entity — Plaintiff Cornerstone. Reading these allegations in the light most favorable to

Defendant Paxton, Plaintiff's three principals— Bernard Markey, William Stewart, and

Glee McAnanly —all made these misrepresentations. (Am. Counterclaims, Doc. 23, 4 1-

3.) Defendant Paxton has therefore pled particularity as it pertains to the identity of the

speaker.

Next, the Court considers the question of when. As recently reaffirmed by the Sixth

Circuit, a plaintiff's “failure to give even one date on which an alleged misrepresentation

occurred dooms [his] ability to allege fraud with particularity.” Greer v. Strange Honey

Farm, LLC, 114 F.4th 605, 616 (6th Cir. 2024) (cleaned up). For instance, alleging that the

fraudulent statements were made during “relevant times” — without identifying such

relevant times in the complaint—falls short of alleging a timeframe with sufficient

particularity. See id. Here, Defendant Paxton’s pleading suffers from a similar problem

because it merely alleges that the fraudulent statements were made “prior to his

engagement and as an inducement to [Defendant Paxton] to engage with Plaintiff.” (Am.

Counterclaims, Doc. 23, § 1.) Such an open-ended timeframe fails to provide Plaintiff

with adequate notice. See, e.g., Bush Truck Leasing, Inc. v. Cummins, Inc., No. 1:18-CV-871,

2020 WL 3871322, at *4 (S.D. Ohio July 9, 2020) (dismissing fraud claim when the plaintiff

merely alleged that statements were made “during purchase negotiations”); Vendeven v.

Wyndham Vacation Resorts, Inc., No. 2:20-CV-56, 2021 WL 5567033, at *7 (M.D. Tenn. Nov.

29, 2021).

Additionally, as Plaintiff points out, the fraud-based counterclaim omits any

indication as to where the alleged misrepresentations took place or the mode of

communication. (Reply, Doc. 47, Pg. ID 751.) While Plaintiff's principal place of business

is in Cincinnati, Ohio, and Defendant Paxton resides in Georgia (Second Am. Ver.

Compl., Doc. 43, 3-4), the Counterclaims do not suggest where or how these alleged

misrepresentations materialized. See, e.g., Bush Truck Leasing, Inc., 2020 WL 3871322, at *4

(highlighting the lack of allegations concerning where the statements were made when

the parties lived in different states); Cole v. Harris, No. 4:09-CV-1270, 2010 WL 11681664,

at *3 (N.D. Ohio Jan. 4, 2010), aff'd, 444 F. App’x 888 (6th Cir. 2012) (dismissing fraud claim

when plaintiffs “fail[ed] to aver when the misrepresentations were made, the location

where these misrepresentations were made, or the mode or medium in which these

misrepresentations were made”); Newberry v. Silverman, 789 F.3d 636, 645 (6th Cir. 2015)

(finding insufficient particularity as to “when and where the statement was made”).

Because Defendant Paxton inadequately pleads particularity as to when, where,

or the mode of the misrepresentations, his fraudulent inducement claim cannot proceed.

II. Constructive Discharge Claim

Turning to Defendant Paxton’s second claim for relief, he incorporates his

preceding allegations of misrepresentations and claims that “Plaintiff's failure to

provide[ ] what it promised to provide [was] designed to and did make [Defendant

Paxton’s] ability to discharge his duties impossible, forcing him to separate from Plaintiff

... and constitut[ing] constructive discharge.” (Am. Counterclaims, Doc. 23, J 5-7.)

Plaintiff contends that it is unclear what type of claim Defendant Paxton is alleging and,

in any event, the type of constructive discharge theory put forth has not been judicially

recognized. (Motion, Doc. 22, Pg. ID 313-16; Reply, Doc. 47, Pg. ID 752-53). The Court

agrees.

Constructive discharge is not an independent cause of action. Starks v. New Par,

No. 98-1300, 181 F.3d 103 (Table), 1999 WL 357757, at *5 (6th Cir. 1999); Donnelly v. Health

Memit. Sols., Inc., No. 2:19-CV-5303, 2022 WL 22883109, at *3 (S.D. Ohio Feb. 8, 2022); Leath

v. Sec’y of United States Dep’t of Veterans Affs., No. 2:23-CV-11407, 2025 WL 968896, at *6

(E.D. Mich. Mar. 31, 2025) (collecting cases); Lucarell v. Nationwide, 44 N.E.3d 319, 331-32

(Ohio Ct. App. 2015), rev’d on other grounds, 97 N.E.3d 458 (Ohio 2018). “Instead, it is a

means of proving the element of an adverse employment action where the employee

quits instead of being fired for an employment discrimination claim.” Donnelly, 2022 WL

22883109, at *3 (quotation omitted); Starks, 1999 WL 357757, at *5 (For constructive

discharge to be actionable, “there must [be] an underlying cause of action for

employment discrimination.”). Here, Defendant Paxton argues that he has pled

constructive discharge by incorporating his fraudulent inducement allegations.

(Response, Doc. 46, Pg. ID 747; Am. Counterclaims, Doc. 23, § 7.) After examining the

Counterclaims as a whole, the Court does not find that Defendant Paxton has alleged an

employment discrimination claim. And, Defendant Paxton has not otherwise clarified

how this constructive discharge theory may service a cognizable claim. Thus, the Court

will dismiss this stand-alone constructive discharge claim.

III. Breach of Contract Claim

A breach of contract involves four elements: “(1) a contract existed, (2) one party

fulfilled his obligations, (3) the other party failed to fulfill his obligations, and (4) damages

resulted from that failure.” Quest Workforce Sols., L.L.C. v. Job1USA, Inc., 75 N.E.3d 1020,

1030 (Ohio Ct. App. 2016). Plaintiff argues that Defendant Paxton has failed to allege any

facts that Plaintiff violated its obligations under a contract or that Defendant Paxton

fulfilled his obligations under a contract. (Motion, Doc. 22, Pg. ID 317; Reply, Doc. 24, Pg.

ID 330-31.) In response, the extent of Defendant Paxton’s argument is that “all of the

allegations of the Counterclaim, read together, fully and completely state a claim for

breach of contract.” (Response, Doc. 46, Pg. ID 747.)

Defendant Paxton alleges that “Plaintiff's failure to honor the promises and

representations [alleged in the fraudulent inducement claim] constitute[s] a breach of

contract.” (Am. Counterclaims, Doc. 23, § 8.) These promises included, among other

things, that Defendant Paxton would receive employee benefits and equity, the company

would be adequately funded, and the company would have sufficient staff. (Id. at 2.)

Furthermore, Defendant Paxton alleges that these promises and representations

“constituted contracts between Plaintiff and [Defendant] Paxton.” (Id. at | 6.) Though

Defendant Paxton alleges that Plaintiff failed to fulfill its promises and representations,

he does not specify his obligations under the purported contract or that he fulfilled such

obligations. “To properly state a claim for breach of contract, the plaintiff must allege,”

among the other elements, that “the nonbreaching party performed his or her contractual

obligations.” Best Motors, L.L.C. v. Kaba, Nos. 113437, 114145, 2025 WL 662466, at *6 (Ohio

Ct. App. Feb. 27, 2025); see also Rachells v. Cingular Wireless, 483 F. Supp. 2d 583, 590 (N.D.

Ohio 2007); Vendeven, 2021 WL 5567033, at *9; Lewandowski, 2023 WL 6536193, at *2. Thus,

Defendant Paxton has not plausibly pled a breach of contract claim.

IV. Alter Ego

Defendant Paxton’s Third-Party Complaint seeks to hold FirstLight liable for “all

the damages to which he is entitled by reason of his Counterclaims.” (Am. Third-Party

Compl., Doc. 23, 4 4.) Plaintiff argues that the Third-Party Complaint fails to specify the

precise claim against FirstLight. (Reply, Doc. 24, Pg. ID 331). It appears that Defendant

Paxton attempts to allege each of the three counterclaims against FirstLight through an

alter ego theory. However, as each of these claims fail for the reasons explained above,

the Court finds that the Third-Party Complaint also fails to state a claim.

V. Leave to Amend

In the event the Court finds pleading inadequacies, Defendant Paxton seeks leave

to amend his Counterclaims and Third-Party Complaint. (Response, Doc. 46, Pg. ID 748.)

However, Defendant Paxton does not provide any proposed amendments. “The problem

with the lack of a motion or proposed amendment is that without viewing the proposed

amendment, it is impossible for the district court to determine whether leave to amend

should [be] granted.” United States ex rel. Harper v. Muskingum Watershed Conservancy

Dist., 739 F. App’x 330, 335 (6th Cir. 2018) (cleaned up); see also Kuyat v. BioMimetic

Therapeutics, Inc., 747 F.3d 435, 444 (6th Cir. 2014) (“A request for leave to amend almost

as an aside to the district court ina memorandum in opposition to the defendant’s motion

to dismiss is not a motion to amend.”) (cleaned up). Thus, the Court cannot currently

determine whether amendment would be proper. At the same time, however,

“{dJismissal with prejudice and without leave to amend is not appropriate unless it is

clear on de novo review that the complaint could not be saved by amendment.” Newberry

v. Silverman, 789 F.3d 636, 646 (6th Cir. 2015) (quotation omitted); see also Brown v.

Matauszak, 415 F. App’x 608, 614 (6th Cir. 2011).

Accordingly, if Defendant Paxton desires to amend his Counterclaims and Third-

Party Complaint, he shall file a motion to amend—along with the proposed amended

pleadings — within twenty-one (21) days of this Order. See Barnett v. Kroger Co., No. 1:22-

CV-544, 2023 WL 5899836, at *6 (S.D. Ohio Sept. 11, 2023).

CONCLUSION

For the foregoing reasons, the Court ORDERS the following:

(1) Plaintiff's Motion to Dismiss Defendant Paxton’s Counterclaims and Third-

Party Complaint (Doc. 21) is DENIED AS MOOT;

(2) Plaintiff's Continued Motion to Dismiss Defendant Paxton’s Amended

Counterclaims and Third-Party Complaint (Doc. 45) is GRANTED;

(3) Defendant Paxton’s Counterclaims and Third-Party Complaint are

DISMISSED WITHOUT PREJUDICE; and

(4) To the extent Defendant Paxton desires to amend his Counterclaims and Third-

Party Complaint, he SHALL FILE a motion to amend—along with the

proposed amended pleadings — within twenty-one (21) days of this Order.

IT IS SO ORDERED.

UNITED STATES DISTRICT COURT

THERN DISTRICT OF QHI

Hoe, We 1 ald!

By:

JUDGE MATTHEW W. McFARLAND

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