Old Republic National Title Insurance Company v. Kensington Vanguard National Land Services of Tx, Llc et al

Brief/Memorandum in Support

N.D. Tex.June 26, 2017

59349620.1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION OLD REPUBLIC NATIONAL TITLE § INSURANCE COMPANY, § § Plaintiff, § § v. § § Civil Action No. 3:17-CV-1014-D KENSINGTON VANGUARD NATIONAL § LAND SERVICES OF TX, LLC, § KENSINGTON VANGUARD NATIONAL § LAND SERVICES, LLC, ELIZABETH § TROUT, JOE GRANT, JENNIFER § McCORMICK, and PETER McGUIRE, § § Defendants. § DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS, OR IN THE ALTERNATIVE, FOR MORE DEFINITIVE STATEMENT Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 1 of 17 PageID 1152 -i- 59349620.1 TABLE OF CONTENTS I. Introduction and Summary of Argument ..........................................................................1 II. Argument and Authorities................................................................................................2 A. Standard of Review Governing Motion to Dismiss under Rule 12(b)(6). .............................................................................................2 B. Plaintiff’s Count Eight Fails to State a Claim Upon Which Relief May be Granted against Trout, Grant or McGuire. ..........................4 C. Plaintiff’s Count Nine Fails to State a Claim Upon Which Relief May be Granted .........................................................................................7 1. Plaintiff failed to identify any specific violations of the CFAA and it failed to plead any facts that show the Employee Defendants allegedly accessed a “protected computer.” ............................7 2. If Plaintiff tried to plead a violation of 18 U.S.C. § 1030(a)(4), it failed to plead all required elements of the claim. .............8 D. In the Alternative, Plaintiff Should Be Ordered to Replead Count Nine to Identify the Specific Provisions of the CFAA Allegedly Violated by Defendants. .......................................................................................9 E. Plaintiff’s Count Ten Claim for Fraud Fails to State a Claim Upon Which Relief May be Granted .................................................................. 10 III. Conclusion .................................................................................................................... 11 Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 2 of 17 PageID 1153 -ii- 59349620.1 TABLE OF AUTHORITIES Page(s) Cases Adams v. Mut. of Omaha Ins. Co., 3:13-CV-4881-D, 2015 WL 1378720 (N.D. Tex. Mar. 26, 2015)........................................... 3 Ashcroft v. Iqbal, 556 U.S. 662 (2008) ...................................................................................................... 2, 3, 4 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) ...................................................................................................... 2, 3, 4 Bramlett v. Med. Protective Co. of Fort Wayne, In., 855 F. Supp. 2d 615 (N.D. Tex. 2012) ................................................................................... 3 Brown v. Whitcraft, 2008 WL 2066929 (N.D. Tex. May 15, 2008) ....................................................................... 9 Campbell v. City of San Antonio, 43 F.3d 973 (5th Cir. 1995) ................................................................................................... 4 Capital One v. Swisher-35, Ltd., CIV A 3:08-CV-1040-D, 2008 WL 4274499 (N.D. Tex. Sept. 17, 2008) ............................. 10 Conceal City, L.L.C. v. Looper Law Enforcement, LLC, 917 F. Supp.2d 611 (N.D. Tex. 2013) .................................................................................... 9 Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194 (Tex.2011)................................................................................................. 11 Grand Time Corp. v. Watch Factory, Inc., 3:08-CV-1770-K, 2010 WL 92319 (N.D. Tex. Jan. 6, 2010) ................................................ 10 Heil Trailer International, Co. v. Kula, No. 4:12-CV-385-Y, 2012 WL 1287764................................................................................ 7 Meats by Linz, Inc. v. Dear, No. 3:10-CV-1511-D, 2011 WL 1515028 (N.D. Tex. Apr. 20, 2011) .................................... 8 Rio Grande Royalty Co., Inc. v. Energy Transfer Partners, L.P., 620 F.3d 465 (5th Cir. 2010) ............................................................................................... 11 Scottrade, Inc. v. Broco Investments, Inc., 10 Civ. 03 537, 2011 WL 1226467 (S.D.N.Y. Mar. 30, 2011) ............................................... 8 Thompson v. City of Waco, Texas, 764 F.3d 500 (5th Cir. 2014) ............................................................................................. 2, 3 Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 3 of 17 PageID 1154 -iii- 59349620.1 Statutes 18 U.S.C.A. § 1030 ................................................................................................................. 7, 8 Computer Fraud and Abuse Act .................................................................................................. 1 HACA................................................................................................................................. 4, 5, 6 Section 43 of the Lanham Act ..................................................................................................... 1 Texas Harmful Access by Computer Act or the Computer Fraud and Abuse Act. ................ 1, 2, 4 Texas Penal Code § 33.02 ....................................................................................................... 4, 5 Other Authorities Federal Rule of Civil Procedure 8 ........................................................................................... 3, 9 Federal Rule of Civil Procedure 12.................................................................................. 1, 2, 3, 9 Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 4 of 17 PageID 1155 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 1 59349620.1 Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants Kensington Vanguard National Land Services of TX, LLC, Kensington Vanguard National Land Services, LLC, Elizabeth Trout, Joe Grant, Jennifer McCormick, and Peter McGuire file this Brief in Support of their Second Motion to Dismiss Counts Eight, Nine, and Ten of Plaintiff’s First Amended Original Complaint, or in the alternative Motion for More Definite Statement as to Count Nine. In support of their Motion, Defendants respectfully show the Court as follows: I. INTRODUCTION AND SUMMARY OF ARGUMENT Plaintiff Old Republic National Title Insurance Company (“Old Republic”) brings this suit against its four former employees, Defendants Elizabeth Trout, Joe Grant, Jennifer McCormick and Peter McGuire (the “Employee Defendants”), who are now employed by Defendant Kensington Vanguard National Land Services of TX, LLC (“Kensington TX”). 1 Old Republic initially asserted that asserted that the Employee Defendants breached contracts, tortiously interfered with existing and prospective contractual relationships, breached their fiduciary duties, conspired with each other and the Kensington entities to cause harm to Old Republic, violated Section 43(a) of the Lanham Act, and disparaged Old Republic. 2 After Defendants filed a Motion to Dismiss, Plaintiff dropped its claim for breach of contract and filed its First Amended Original Complaint [Dkt. 65] adding new claims for alleged violations of the Texas Harmful Access by Computer Act (Count Eight), the Computer Fraud and Abuse Act (Count Nine), and fraud (Count Ten). 11 The Employee Defendants, Kensington TX and Kensington Vanguard National Land Services, LLC (“Kensington”) shall be collectively referred to as “Defendants”). 2 Defendants filed a Motion to Dismiss [Dkt. 58] seeking the dismissal of the breach of contract, tortious interference, Lanham Act and business disparagement claims. Plaintiff dropped its claim for breach of contract when it filed its First Amended Complaint, but Defendants’ challenge to counts One, Four and Five of the First Amended Counterclaim are currently pending before the Court. Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 5 of 17 PageID 1156 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 2 59349620.1 In theirs Second Motion to Dismiss, Defendants seek the dismissal of Counts, Eight, Nine, and Ten of Plaintiff’s First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), because Plaintiff has failed to plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Indeed, in its new claims for relief, Plaintiff either omitted required elements or merely quoted the elements of the claim without offering any allegations providing the requisite factual support to survive a motion to dismiss. The United States Supreme Court has made clear that “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2008). Here, counts Eight and Nine should be dismissed against the Employee Defendants because Plaintiff failed to plead sufficient facts to plausibly support a claim for violations of the Texas Harmful Access by Computer Act or the Computer Fraud and Abuse Act. And, Count 10 should be dismissed because Plaintiff did not plead all of the elements necessary to support its claim for fraud. In the alternative, if the Court finds that Count Nine should not be dismissed, Defendants request that Plaintiff be ordered to replead its claim with specificity identifying the alleged provisions of the CFAA at issue in this case. II. ARGUMENT AND AUTHORITIES A. STANDARD OF REVIEW GOVERNING MOTION TO DISMISS UNDER RULE 12(B)(6). A complaint should be dismissed under Rule 12(b)(6) whenever the plaintiff fails to “plead ‘enough facts to state a claim to relief that is plausible on its face.’” Thompson v. City of Waco, Texas, 764 F.3d 500, 503 (5th Cir. 2014) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “In deciding a Rule 12(b)(6) motion to dismiss, the court evaluates the sufficiency of plaintiffs’ amended complaint by “accept[ing] all well-pleaded facts as true, Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 6 of 17 PageID 1157 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 3 59349620.1 viewing them in the light most favorable to the plaintiff.’” Bramlett v. Med. Protective Co. of Fort Wayne, In., 855 F. Supp. 2d 615, 618 (N.D. Tex. 2012) (Fitzwater, C.J.) (quoting In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007)) (internal quotation marks and alteration omitted). Although courts accept well-pleaded facts as true and view them in a light most favorable to the plaintiff, they do not “accept [a] plaintiff’s legal conclusions as true.” Thompson, 764 F.3d at 502 (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Rather, “[t]o survive [a] motion to dismiss under Rule 12(b)(6), [a plaintiff] must plead ‘enough facts to state a claim to relief that is plausible on its face.’” Adams v. Mut. of Omaha Ins. Co., 3:13-CV-4881-D, 2015 WL 1378720, at *2 (N.D. Tex. Mar. 26, 2015) (Fitzwater, J.) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556); see also Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise a right to relief above the speculative level”). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not ‘shown’ - ‘that the pleader is entitled to relief.’” Iqbal, 556 U.S. at 679 (alteration omitted) (quoting Fed. R. Civ. P. 8(a)(2)). “Furthermore, under Rule 8(a)(2), a pleading must contain ‘a short and plain statement of the claim showing that the pleader is entitled to relief.’” Adams, 2015 WL 1378720 at *2 (quoting Fed. R. Civ. P. 8(a)(2)). Although “the pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ “it demands more than . . . ‘labels and conclusions.’” Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 7 of 17 PageID 1158 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 4 59349620.1 Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). “[C]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.” Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995) (citing Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993)); see also Iqbal, 556 U.S. at 678 (“[A] formulaic recitation of the elements of a cause of action will not do.”) (internal quotations omitted). Rather, factual allegations must be placed in a context plausibly suggesting (not merely consistent with) each required element of the claim against each defendant. See Twombly, 550 U.S. at 557. To raise a right to relief, the complaint must contain either direct allegations or permit properly drawn inferences to support “every material point necessary to sustain a recovery”; thus, “[d]ismissal is proper if the complaint lacks an allegation regarding a required element necessary to obtain relief.” Campbell, 43 F.3d at 975 (internal quotations and citations omitted). B. PLAINTIFF’S COUNT EIGHT FAILS TO STATE A CLAIM UPON WHICH RELIEF MAY BE GRANTED AGAINST TROUT, GRANT OR MCGUIRE. In Count Eight, Plaintiff alleges that the Employee Defendants violated the Texas Harmful Access by Computer Act (“HACA”). This cause of action requires that Plaintiff allege, and ultimately prove, that each of the Employee Defendants improperly accessed Plaintiff’s computers, computer network or computer systems. Importantly, Plaintiff’s First Amended Complaint does not contain such allegations. The Texas HACA creates a civil cause of action for a “person who is injured or whose property has been injured” by knowing or intentional violations of Texas Penal Code Chapter 33, Computer Crimes. Tex. Civ. Prac. & Rem. §143.001(a). Texas Penal Code Chapter 33 states broadly that [a] person commits an offense if the person knowingly accesses a computer, Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 8 of 17 PageID 1159 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 5 59349620.1 computer network, or computer system without the effective consent of the owner. Tex. Pen. Code § 33.02(a). The term “access” means to “approach, instruct, communicate with, store data in, retrieve or intercept data from, alter data or computer software in, or otherwise make use of any resource of a computer, computer network, computer program, or computer system. Id. § 33.01(1). In its Amended Complaint, Plaintiff asserts the mere conclusory allegation that the Employee Defendants “knowingly accessed Old Republic’s computers and/or computer system to obtain information for use at Kensington.” See Amended Complaint at ¶ 120. That conclusory allegation, without more, is insufficient as a matter of law to state a claim for relief. When reviewing Plaintiff’s factual allegations, the Court will note that Plaintiff failed to allege sufficient facts that plausibly show that Trout, Grant or McGuire allegedly violated the HACA. 3 Plaintiff’s factual allegations purporting to support Count 8 are contained in paragraphs 21, 24, 26, 41, and 50 of the Amended Complaint. In paragraph 21, Plaintiff alleges, “Trout contacted Amy Rodriguez of Old Republic and requested copies of her commission reports for the past prior 18 months … . Rodriguez provided Trout with the requested reports. Trout in turn provided them to Brian Cooper (“Cooper”) at Kensington National for consideration.” This allegation is insufficient to support a claim for violation of the HACA as there is no factual allegation that Trout used Plaintiff’s computer or computer system to transmit her commission reports to Cooper, nor is there any allegation regarding the means used by Trout to send her commission reports to Cooper. In paragraph 24, Plaintiff alleges that “Grant supplied Kensington, through Mitchum and Cooper, with sensitive and confidential internal Old Republic financial records as part of his 3 Defendants, while still contesting the validity of the allegations asserted against Jennifer McCormick, do not contest that a plausible HACA cause of action has been pleaded against Mrs. McCormick. Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 9 of 17 PageID 1160 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 6 59349620.1 compensation negotiation, yet he did not redact any information in the reports.” This allegation is insufficient as it does not mention or refer to Grant using any of Plaintiff’s computers or its network to transmit any materials to Mitchum or Cooper. In paragraph 26, Plaintiff alleges that “Grant began copying, either personally or through a directive to his assistant, Old Republic files and records to aid in transfer of open files to Kensington.” Like the previous allegation involving Grant, there is no mention of Grant accessing or using a computer or computer network to copy materials. And the copying of hard copy documents does not constitute a violation of the HACA. In paragraph 41 of the Amended Complaint, Plaintiff alleges that “the Employees began earnestly copying Old Republic closing files that were open but which were not scheduled to close before their planned departure.” Again, this allegation is insufficient to trigger potential liability under the HACA as there is no reference to any of the Defendants using a computer or computer network. Finally, in paragraph 50, Plaintiff alleges that “McGuire also sent the proposed settlement statement for this transaction [a real estate transaction that closed after the Employee Defendants started to work at Kensington] to his personal email address, ensuring he would have access to it after joining Kensington.” This allegation suffers from the same fatal flaw as the others as Plaintiff failed to allege that McGuire used an Old Republic computer or computer network to send the email to his personal email address. For the foregoing reasons, Count Eight is defective and, as such, should be dismissed with prejudice against Defendants Trout, Grant and McGuire. Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 10 of 17 PageID 1161 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 7 59349620.1 C. PLAINTIFF’S COUNT NINE FAILS TO STATE A CLAIM UPON WHICH RELIEF MAY BE GRANTED In Count Nine, Plaintiff alleges an unspecified violation of the CFAA against the Employee Defendants. There are seven types of criminal activity enumerated in the CFAA: obtaining national security information, compromising confidentiality, trespassing in a government computer, accessing to defraud and obtain value, damaging a computer or information, trafficking in passwords, and threatening to damage a computer. 18 U.S.C. § 1030. While the CFAA does provide a private right of action against individuals for violations of the act, in the vast majority of civil cases involving non-governmental entities, the statute requires a defendant must have accessed a “protected computer” “without authorization” and violated one of the prohibitions set forth in the CFAA. See 18 U.S.C.A. § 1030(a) (2). Under the CFAA, a “protected computer” is defined as “a computer ... which is used in or affecting interstate or foreign commerce or communication.” 18 U.S.C.A. § 1030(e)(2)(B); Heil Trailer International, Co. v. Kula, No. 4:12-CV-385-Y, 2012 WL 1287764. 1. Plaintiff failed to identify any specific violations of the CFAA and it failed to plead any facts that show the Employee Defendants allegedly accessed a “protected computer.” In its Amended Complaint Plaintiff failed to identify which section(s) of the CFAA were allegedly violated by any of the Employee Defendants. This failure prevents Defendants from assessing the merits of Plaintiff’s allegation and either challenging the allegations via a motion to dismiss or motion for summary judgment. Indeed, at this time, Defendants are not certain what provisions of the CFAA they are accused of violating. More, importantly, Plaintiff failed to assert any factual allegations that show that any of the Employee Defendants allegedly accessed a “protected computer” (i.e., one used in interstate commerce) to cause any damage to Plaintiff. Instead, Plaintiff simply alleges in conclusory Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 11 of 17 PageID 1162 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 8 59349620.1 fashion that the Employee Defendants “intentionally accessed password-protected computers of Old Republic for acts that exceeded their authority from Old Republic. Specifically, the Employees accessed Old Republic computers to download or print Old Republic data concerning customers and transactions.” Amended Complaint at ¶ 123. Plaintiff further alleges that the Employee Defendants “knowingly caused the transmission of data from the Old Republic computers to portable drives or printers for the purpose of taking existing and future business from Old republic.” Id. at ¶ 124. 4 These allegations and the other allegations discussed in section B, supra, show that Plaintiff failed to allege that the computers used by any of the Employee Defendants to further the alleged theft of Plaintiff’s trade secrets and confidential information were “protected computers” as required by the statute. See Meats by Linz, Inc. v. Dear, No. 3:10-CV-1511-D, 2011 WL 1515028, at *3 (N.D. Tex. Apr. 20, 2011) (Fitzwater, C.J.). Thus, for this reason alone, Plaintiff’s allegations are insufficient to state a claim for violation of the CFAA. 2. If Plaintiff tried to plead a violation of 18 U.S.C. § 1030(a)(4), it failed to plead all required elements of the claim. Construing the Amended Complaint in the light most favorable to Plaintiff, it appears that Plaintiff may be attempting to assert a claim for alleged violations of section 18 U.S.C. § 1030(a)(4). To properly assert such a claim under the CFAA, a litigant must plead four elements: 1) a defendant has accessed a protected computer; 2) has done so without authorization or by exceeding such authorization as was granted; 3) has done so knowingly and with intent to defraud; and 4) as a result has furthered the intended fraud and obtained anything of value. Scottrade, Inc. v. Broco Investments, Inc., 10 Civ. 03 537, 2011 WL 1226467 *9 (S.D.N.Y. Mar. 4 Printing a hard copy of a document and taking it with you does not violate any of the provisions of the CFAA. Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 12 of 17 PageID 1163 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 9 59349620.1 30, 2011). However, as discussed above, Plaintiff’s allegations, even when viewed in their most favorable light, fail to contain facts supporting all of the requisite elements of a CFAA claim. See, Amended Complaint at ¶¶ 24-50, and ¶¶122-125. For this additional reason, Plaintiff’s Count Nine should be dismissed with prejudice. D. IN THE ALTERNATIVE, PLAINTIFF SHOULD BE ORDERED TO REPLEAD COUNT NINE TO IDENTIFY THE SPECIFIC PROVISIONS OF THE CFAA ALLEGEDLY VIOLATED BY DEFENDANTS. In the alternative, if the Court is not inclined to grant Defendants’ Motion to Dismiss Plaintiff’s Ninth Count for alleged violation of the CFAA, Defendants request that the Court order Plaintiff to amend its Complaint setting forth the specific provisions(s) that it contends Defendants violated. “A motion for a more definite statement under Rule 12(e) is available where the pleading ‘is so vague or ambiguous that the party cannot reasonably prepare a response.’” Conceal City, L.L.C. v. Looper Law Enforcement, LLC, 917 F. Supp.2d 611, 621 (N.D. Tex. 2013) (Fitzwater, C.J.) (quoting Rule 12(e)). “‘[A] complaint will be deemed inadequate only if it fails to (1) provide notice of circumstances which give rise to the claim, or (2) set forth sufficient information to outline the elements of the claim or permit inferences to be drawn that these elements exist.’” Brown v. Whitcraft, 2008 WL 2066929, at *2 (N.D. Tex. May 15, 2008) (Fitzwater, C.J.) (quoting Beanal v. Freeport-McMoran, Inc., 197 F.3d 161, 164 (5th Cir. 1999)). In this case, Plaintiff has failed to allege the violation of any specific provisions of the CFAA. Indeed, the Amended Complaint leaves Defendants and the Court guessing about which provision or CFAA provisions they are alleged to have violated. Federal Rule of Civil Procedure 8(a)(2) requires that a complaint set forth a “short and plain statement of the claim showing that the pleader is entitled to relief.” “The purpose of the Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 13 of 17 PageID 1164 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 10 59349620.1 Rule is to ‘give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.’” Capital One v. Swisher-35, Ltd., CIV A 3:08-CV-1040-D, 2008 WL 4274499, at *2 (N.D. Tex. Sept. 17, 2008) (Fitzwater, C.J.) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). “This enables the defendant to prepare a responsive pleading.” Id. “To comport with this requirement, the complaint must either provide notice of the circumstances which give rise to the claim, or set forth sufficient information to outline the elements of the claim or permit inferences to be drawn that these elements exist.” Grand Time Corp. v. Watch Factory, Inc., 3:08-CV-1770-K, 2010 WL 92319, at *5 (N.D. Tex. Jan. 6, 2010) (citing General Star Indem. Co. v. Vesta Fire Ins. Co., 173 F.3d 946, 951 (5th Cir. 1999)). Plaintiff’s conclusory assertion that Defendants violated the CFFA provides no clarity or explanation as to the basis of its claim, and Defendants are unable to adequately prepare a response or develop its defenses. Therefore, if this Court is not inclined to dismiss Plaintiff’s count Nine, Defendants request that the Court order Plaintiff to amend its Complaint by providing a more definitive statement of its claim for violations of the CFAA. If Plaintiff is unwilling or unable to amend its Complaint within 14 days of this Court’s Order, Plaintiff’s Ninth Count should be dismissed with prejudice. E. PLAINTIFF’S COUNT TEN CLAIM FOR FRAUD FAILS TO STATE A CLAIM UPON WHICH RELIEF MAY BE GRANTED In Count Ten, Plaintiff alleges that Kensington TX and Kensington National committed fraud in allegedly telling Plaintiff that the reason why Kensington TX was interested in an agency agreement with Plaintiff was “to improve our already existing relationship with ORT.” Amended Complaint at ¶ 128. A plaintiff seeking to prevail on a fraud claim must prove that (1) the defendant made a material misrepresentation; (2) the defendant knew the representation was false or made the representation recklessly without any knowledge of its truth; (3) the defendant Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 14 of 17 PageID 1165 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 11 59349620.1 made the representation with the intent that the other party would act on that representation or intended to induce the party's reliance on the representation; and (4) the plaintiff suffered an injury by actively and justifiably relying on that representation. See; Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 217 (Tex.2011); Rio Grande Royalty Co., Inc. v. Energy Transfer Partners, L.P., 620 F.3d 465, 468 (5th Cir. 2010) (citing Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001)). In the Amended Complaint Plaintiff failed to plead any factual allegations that show Kensington TX or Kensington National knew, at the time the statement in question was allegedly made, that it was false, or that the statement was made recklessly without knowledge of its truth or falsity. See, Amended Complaint at ¶¶ 3-36, and ¶¶ 126-133; Exxon Corp. 348 S.W. 3d at 217 (Tex. 2011) (plaintiff must establish the defendant either made the representation knowing it was false or made the representation recklessly). Despite the requirement that it do so, Plaintiff failed to plead any factual allegation that show that Kensington TX or Kensington National knew, at the time the statement in question was allegedly made, that it was false, or that the statement was made recklessly without knowledge of its truth or falsity. Accordingly, Plaintiff’s claim for fraud should be dismissed with prejudice. III. CONCLUSION THEREFORE, Defendants Kensington Vanguard National Land Services, LLC, Kensington Vanguard National Land Services of TX, LLC, Elizabeth Trout, Peter McGuire, Jennifer McCormick, and Joe Grant respectfully request that this Court grant their Second Motion to Dismiss Counts Eight, Nine and Ten of Plaintiff’s First Amended Original Complaint, with prejudice, or in the alternative, if the Court is not inclined to dismiss Plaintiff’s Ninth Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 15 of 17 PageID 1166 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 12 59349620.1 Count, to require Plaintiff to re-plead its claim with specificity, and for such further relief, at law or in equity, to which they may be justly entitled. Submitted in this 26 th day of June, 2017. Respectfully submitted, By: /s/ Stephen E. Fox Stephen E. Fox Texas Bar No. 07337260 sfox@polsinelli.com Robert J. Garrey Texas Bar No. 07703420 bgarrey@polsinelli.com D. Rockwell Bower Texas Bar No. 24087193 rbower@polsinelli.com POLSINELLI, PC 2950 N. Harwood Street Suite 2100 Dallas, Texas 75201 Telephone: (214) 397-0030 Facsimile: (214) 397-0033 Counsel for Defendants Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 16 of 17 PageID 1167 DEFENDANTS’ BRIEF IN SUPPORT OF SECOND MOTION TO DISMISS OR, IN THE ALTERNATIVE, MORE DEFINITE STATEMENT PAGE 13 59349620.1 CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the above and foregoing document was electronically filed on June 26, 2017 with the Clerk of the Court for the United States District Court for the Northern District of Texas, using the electronic filing system, and that a copy has been served upon all counsel of record, as identified below. Bradford W. Irelan birelan@imtexaslaw.com Jeremy T. Brown jbrown@imtexaslaw.com Irelan McDaniel PLLC 10440 N. Central Expressway Suite 800 Dallas, TX 75231 Counsel for Plaintiff /s/ Stephen E. Fox Stephen E. Fox Case 3:17-cv-01014-D Document 84 Filed 06/26/17 Page 17 of 17 PageID 1168