Summary
holding that catch-all “incorporation by reference” statement in the civil conspiracy section of a complaint did not give defendants fair notice that any of the other torts listed in the complaint were the underlying tort
Summary of this case from Homoki v. Conversion Servs., Inc.Opinion
Civil Action No. 3:03cv2551-M.
June 30, 2004
MEMORANDUM OPINION AND ORDER
Before the Court is the Partial Motion to Dismiss of Defendants Quest! Global Angling Adventures, L.C.C., Scott Swanson and Steve Swanson (collectively, "Defendants"), filed on February 27, 2004. Upon review of the pleadings, briefing, and applicable law, the Court is of the opinion, for the reasons stated below, that Defendants' Motion should be GRANTED in part and DENIED in part.
BACKGROUND
Plaintiff, a company that conducts fishing expeditions in Brazil, brings this action against Quest! Global Angling Adventures ("Quest"), a booking agency, and Scott Swanson and Steve Swanson ("the Swansons"), two brothers who are allegedly associated with Quest in an ownership or managerial capacity, alleging various state law causes of action. Specifically, the Second Amended Complaint alleges claims of breach of contract, common law misappropriation, conversion, conspiracy, tortious inference with contract, business disparagement, as well as violations of the Texas Deceptive Trade Practices Act. In addition, Plaintiff seeks declaratory relief pursuant to Tex. Civ. Prac. Rem. Code § 37.001.
In its response to the partial motion to dismiss, Plaintiff withdraws the claim for conversion and declaratory judgment.
The Second Amended Complaint contains the following factual allegations. In 1997, Plaintiff entered into a contract with Quest whereby Quest would act as an agent to book fishing trips hosted by Plaintiff and Plaintiff would pay Quest a percentage of the fees collected from such trips. Quest would book reservations only to cancel at the last minute, leaving Plaintiff unable to book replacement reservations. Under the original booking agreement, the deposits for the cancelled trips should have been forfeited. However, Plaintiff agreed to allow such deposits to "roll over" to future reservations if Quest provided additional trip participants. However, Quest never provided such participants. As a result of Defendant's actions, Plaintiff sustained $250,000.00 in lost revenue. Plaintiff terminated its agreement with Quest because Quest refused to enter into an exclusivity agreement.
Before this agreement was terminated, however, the Swansons each purchased from Plaintiff, for $25,000.00 a piece, a special club membership. Under the membership, the Swansons were entitled to discounts and benefits. After termination of the agreement, the Swansons conspired to retaliate against Plaintiff by using their memberships to steal valuable business information that Plaintiff had acquired through extensive labor. After the agreement had been terminated, Defendants continued to improperly associate themselves with Plaintiff. Further, when customers of Plaintiff contacted Quest to book trips with Plaintiff, Quest directed them to Plaintiff's competitors.
On February 27, 2004, Defendants filed their Partial Motion to Dismiss, seeking to dismiss, pursuant to Rule 12(b)(6), all of Plaintiff's claims except its Deceptive Trade Practices claims and business disparagement claims.
STANDARD OF REVIEW
Under Rule 12(b)(6), a claim may be dismissed when a plaintiff fails to allege any set of facts in support of his claim that would entitle him to relief. Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir. 2002) (citing McConathy v. Dr. Pepper/Seven Up Corp., 131 F.3d 558, 561 (5th Cir. 1998)). When considering a motion to dismiss, the Court accepts as true all well-pled allegations in the Complaint and views them in the light most favorable to the plaintiff. Malina v. Gonzales, 994 F.2d 1121, 1125 (5th Cir. 1993). However, conclusory allegations or legal conclusions set forth as factual allegations will not prevent dismissal. Taylor, 296 F.3d at 378; Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993).
ANALYSIS
I. Breach of Contract Claim
The Court finds that Plaintiff has asserted sufficient facts on which to base a claim for breach of contract. In order to bring a breach of contract claim, Plaintiff must assert 1) the existence of a valid contract; 2) performance on the part of Plaintiff; 3) breach on the part of Defendant; and 4) that the breach injured Plaintiff. Southwell v. Univ. of the Incarnate Word, 974 S.W.2d 351, 354-55 (Tex.App.-San Antonio 1998, pet. denied). The Complaint alleges a breach of an agreement between the parties in which Plaintiff agreed to "roll over" deposits for cancelled trips, which otherwise would have been forfeited, in exchange for Quest providing new clients. The Complaint can also be read, as Defendants do, to allege a breach of the booking agreement. However, Plaintiff states in its Response that it is alleging only a claim for breach of the "roll over" agreement. Furthermore, the facts of the Complaint primarily address the "roll over" agreement and are insufficient to support of a claim for breach of the booking agreement. Thus, to the extent the Complaint may be construed to allege breach of the booking agreement, the Court grants Defendants' Motion to Dismiss as to any such claim.
However, the Court finds that Plaintiff has met its burden in regards to the alleged "roll over" contract. Plaintiff alleges that it agreed to "roll over" the deposits in exchange for Quest providing new customers; Plaintiff alleges that it did "roll over" the deposits; Quest failed to provide new customers; and Plaintiff lost $250,000.00 as a result. In its Motion to Dismiss, Quest asserts that the "roll over" is not a separate contract, but instead constitutes a waiver of Plaintiff's right to unpaid deposits. However, as the "roll over" was allegedly conditional on Quest's providing new customers, it is not a waiver of a right as Quest asserts. Thus, Defendants' Motion to Dismiss is denied as to this claim.
In their Motion to Dismiss, Defendants include a copy of the original booking agreement between Plaintiff and Quest, and they ask the Court to consider it in ruling on the Motion to Dismiss. The Court finds that it should not be considered. The law allows defendants to attach documents to motions to dismiss only if "they are referred to in the plaintiff's complaint and are central to her claim." Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 499 (5th Cir. 2000) (citing Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)). Defendants assert that the booking agreement prevents Plaintiff from bringing a suit for monetary damages since the agreement outlines other remedies for non-payment of deposits. However, Plaintiff expressly alleges in the Complaint that the "roll over" agreement was a modification of the booking agreement. As there is nothing in the booking agreement preventing its modification, it has no bearing on either the formation or breach of the "roll over" agreement. Hence, it is not central to that claim, and thus the Court will not consider it.
II. Common Law Misappropriation Claim
In order to bring a common law misappropriation claim, Plaintiff must assert that 1) the product in question was produced through extensive time, labor, and money; 2) Defendants' use of that product is in competition with Plaintiff, "thereby gaining a special advantage in that competition ( i.e. `free ride') because [D]efendant[s] [are] burdened with little or none of the expense incurred by Plaintiff;" and 3) Plaintiff suffered commercial damage. U.S. Sporting Products, Inc. v. Johnny Stewart Game Calls, Inc., 865 S.W.2d 214, 218 (Tex.App.-Waco 1993, writ denied). Defendants assert that Plaintiff fails to state a claim because Defendants and Plaintiff are not in direct competition, hence Plaintiff fails to allege sufficient facts to support the second element. Plaintiff argues that because both Defendants and Plaintiff compete for participants for fishing trips in the Amazon, they are direct competitors. Compl. ¶ 24. The Court finds that Plaintiff's allegation sufficiently supports its claim. Plaintiff not only alleges that Defendants appropriated its knowledge of fishing in the Amazon, its business practices and its customers' names, products that required extensive effort on the part of Plaintiff, but also that Defendants and Plaintiff compete for the same customers. Furthermore, Plaintiff alleges that it has lost customers as a result of Defendants' actions. As such, Plaintiff has alleged sufficient facts to support a misappropriation claim. Defendants' Motion to Dismiss is denied as to the misappropriation claim.
III. Tortious Interference Claim
It is not clear from the Complaint whether Plaintiff brings a claim for tortious interference with existing contract or tortious inference with prospective contract. In its Response, however, Plaintiff clarifies that it brings an action for tortious interference with prospective contract. In a claim for tortious interference with a prospective contract, Plaintiff must satisfy five elements: 1) a "reasonable probability" that the plaintiff would have entered into a contractual relationship; 2) the defendant acted maliciously by intentionally preventing the relationship from occurring with the purpose of harming the plaintiff; 3) defendant lacked privilege or justification; 4) the plaintiff was harmed by the interference; and 5) the defendant's conduct was independently tortious or unlawful. See Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711 (Tex. 2001); Larson v. Family Violence Sexual Assault Prevention Ctr. of S. Tex., 64 S.W.3d 506 (Tex.App. — Corpus Christi 2001, pet. denied). Defendants do not question the sufficiency of facts for the first four elements. The only element in question is the last: Defendants assert that Plaintiff has not alleged any set of facts supporting the claim that Defendants' conduct was independently tortious or unlawful. However, since Plaintiff alleges sufficient facts to support a misappropriation claim and those facts give rise to both the misappropriation and tortious interference claims, Plaintiff's burden is satisfied. Therefore, Defendants' Motion to Dismiss is denied as to Plaintiff's tortious interference with prospective contract claim.
IV. Conspiracy Claim
To bring a claim for conspiracy, Plaintiff must show 1) the involvement of two or more persons; 2) an object to be accomplished; 3) a meeting of minds on the object or course of action; 4) one or more unlawful, overt acts; and 5) damages as the proximate result. Closs v. Goose Creek Consol. Indep. Sch. Dist., 874 S.W.2d 859, 871-72 (Tex.App.-Texarkana 1994, no writ). Defendants assume that Plaintiff has only brought a claim for conspiracy as to its conversion claim. Since Plaintiff has withdrawn the conversion claim, Defendants assert that Plaintiff has no cause of action for conspiracy, since the law requires the existence of an underlying tort. Tilton v. Marshall, 925 S.W.2d 672, 681 (Tex. 1996). In its Response, Plaintiff alleges that the Complaint asserts a claim for conspiracy regarding common law misappropriation, tortious interference with prospective contract, and business disparagement, as well as for conversion. While Plaintiff concedes that the claim for conspiracy to convert must be withdrawn with the conversion claim, Plaintiff contends that the conspiracy claim remains as to the other torts. The Court agrees with Defendants. Under the count alleging conspiracy, the Complaint alleges facts concerning conspiracy to convert, but not facts concerning conspiracy as to other torts. While the count incorporates by reference the allegations underlying all of Plaintiff's claims, the Court is of the view that the Complaint nevertheless fails to provide Defendants with fair notice of any conspiracy claim related to Plaintiff's other tort claims. Thus, the Court grants Defendants' Motion to Dismiss as to Plaintiff's conspiracy claim, but grants Plaintiff leave to amend its Complaint, within fifteen days from the date of this Order, to allege facts, if any, establishing that Defendants conspired against Plaintiff in connection with any of Plaintiff's other claims.
The plaintiff is required in the pleadings to give the defendant fair notice of all claims brought against her. Conley v. Gibson, 78 S.Ct. 99, 103 (1957).
CONCLUSION
For the reasons stated above, the Court DENIES Defendants' Partial Motion to Dismiss as to Plaintiff's claims of breach of contract, common law misappropriation, and tortious interference with prospective contract. The Court GRANTS Defendants' Motion as to Plaintiff's conspiracy claim and therefore dismisses the claim without prejudice with leave to amend as stated above. The Court notes that also before the Court is Plaintiff's Motion for Leave to File its Third Amended Complaint. In light of the Court's rulings on the substantive issues analyzed herein, which are largely pled in the same way in the Third Amended Complaint, the Court DENIES Plaintiff's Motion for Leave. Plaintiff may file a Third Amended Complaint repleading specifically only as permitted by this Order.
SO ORDERED.