Day Dreams Resources, LLC et al v. Hutchison
Filing
18
ORDER denying 11 Motion to Dismiss. Signed by Honorable David C. Bramlette, III on July 21, 2015. (AA)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
DAY DREAMS RESOURCES, LLC
and JERRY P. OGDEN
VS.
PLAINTIFFS
CIVIL ACTION NO: 5:15-cv-37-DCB-MTP
CHARLES D. HUTCHISON
DEFENDANT
ORDER DENYING MOTION TO DISMISS
This cause is before the Court on Defendant’s, Charles D.
Hutchison’s, Motion to Dismiss [docket entry no. 11]. Having
considered the motion and responses, applicable statutory and case
law, and being otherwise fully informed in the premises, the Court
finds as follows:
I. Factual1 and Procedural Background
Plaintiff Jerry P. Ogden is the sole member and manager of
Plaintiff Day Dreams Resources, LLC (“Day Dreams”). Day Dreams
entered into an oral contract with Defendant Charles D. Hutchison
to acquire interests in the Tuscaloosa Marine Shale, that covers
parts
of
southern
Louisiana
and
southwestern
Mississippi,
on
Hutchison’s behalf. On Hutchison’s instructions, “Day Dreams and
Ogden, or their agent,” were to obtain commitments for lease
agreements with the owners of the mineral rights in the land,
1
All facts in this opinion are taken from the Complaint.
1
contingent on receiving clear title. Compl. ¶ 8(c). Day Dreams
contracted with Lone Wolf Properties, LLC (“Lone Wolf”) to act as
its “acquisition agent in providing lease acquisition and other
landman services.” Compl. ¶ 9. “Hutchison agreed to reimburse Day
Dreams for expenditures made for his benefit during the course of
acquiring the leases.” Compl. ¶ 8(h). Hutchison also agreed to pay
Ogden a finder’s fee based on the net mineral acreage acquired.
“Day Dreams and/or Lone Wolf acquired for Hutchison’s benefit
twenty-one (21) oil, gas and mineral leases consisting of 3,517.455
net mineral acres” from July 2013 to July 2014. Compl. ¶11. Between
July and September 2014, Day Dreams identified nineteen more
mineral tracts with potential for acquisition for the benefit of
Hutchison. In the last week of October 2014, Hutchison instructed
Day Dreams, through Ogden, to stop leasing additional acreage. By
this time, Day Dreams and/or Lone Wolf had already “leased or
committed to lease” ten of those nineteen tracts. Compl. ¶ 13. Day
Dreams alleges that Hutchison has refused to pay for these leases,
thus requiring Day Dreams and/or Lone Wolf “to fund the lease
acquisitions in order to avoid defaulting.” Compl. ¶ 15.
II. Analysis
Hutchison has moved to dismiss Day Dreams’ claims arguing that
Day Dreams lacks standing to assert this claim under Federal Rule
of Civil Procedure 12(b)(1). Specifically, Hutchison argues that
Day Dreams has not alleged an injury in fact.
2
“To survive a motion to dismiss, 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) (internal quotation omitted). The plaintiff must
plead sufficient facts so that the Court may reasonably infer the
defendant’s
liability
for
the
alleged
misconduct.
Id.
“[A]
plaintiff armed with nothing more than conclusions cannot unlock
the doors of discovery.” Doe v. Robertson, 751 F.3d 383, 393 (5th
Cir. 2014) (internal quotations omitted).
“Constitutional standing is a jurisdictional question.” Brown
v. Offshore Specialty Fabricators, Inc., 663 F.3d 759, 769 (5th
Cir. 2011). A motion to dismiss based on standing is therefore
governed
by
the
standard
of
Rule2
12(b)(1)
rather
than
Rule
12(b)(6). Harold H. Huggin Realty, Inc. v. FNC, Inc., 634 F.3d 787,
795 n.2 (5th Cir. 2011). In a motion under Rule 12(b)(1), “a court
may
evaluate
(1)
the
complaint
alone,
(2)
the
complaint
supplemented by undisputed facts evidenced in the record, or (3)
the complaint supplemented by undisputed facts plus the court’s
resolution of disputed facts.” Den Norske Stats Oljeselskap As v.
HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2011). To establish
standing, the plaintiff must meet the elements of (1) an injury in
fact, (2) causation, and (3) redressability. Lujan v. Defenders of
2
All references in this opinion are to the Federal Rules of
Civil Procedure unless otherwise noted.
3
Wildlife, 504 U.S. 555, 560-61 (1992). An injury in fact is “an
invasion of a legally protected interest which is (a) concrete and
particularized and (b) actual or imminent, not conjectural or
hypothetical.” Id., at 560 (internal quotation marks and citations
omitted). The cause of the injury must be “fairly traceable” to an
action by the defendant “and not the result of the independent
action of some third party not before the court.” Id. (internal
quotation marks omitted). And “it must be likely, as opposed to
merely
speculative,
favorable
decision.”
that
the
Id.,
injury
at
561
will
be
(internal
redressed
by
a
quotation
marks
omitted).
Hutchison argues that Day Dreams has not plead an injury
because (1) it is not apparent from the face of the complaint that
Day Dreams
suffered
damage
because
it
pled
using
the
phrase
“and/or”; (2) Day Dreams alleged only an insufficient threatened
injury from its contract with Lone Wolf.
1. And/or
In its complaint, Day Dreams alleges that either it or its
agent Lone Wolf acquired the leases or lease commitments on behalf
of Hutchison. See Compl. ¶ 11 (“Day Dreams and/or Lone Wolf
acquired . . . .”). Hutchison argues that the use of “and/or” means
that the complaint can be read to mean that only Lone Wolf suffered
any injury from Hutchison’s alleged failure to pay on the contract.
It is true that “even when the plaintiff has alleged injury
4
sufficient to meet the ‘case or controversy’ requirement, . . . the
plaintiff generally must assert his own legal rights and interests,
and cannot rest his claim to relief on the legal rights or
interests of third parties.” Warth v. Seldin, 422 U.S. 490, 499
(1975). But here, Day Dreams is asserting its rights under the
contract with Hutchison. The contract, as alleged in the complaint,
contemplated that Day Dreams would hire an acquisition agent such
as Lone Wolf to acquire the mineral leases. See Compl. ¶ 8(c).
Therefore, this argument is without merit.
2. Threatened Injury
In
suffered
his
briefing,
reliance
Hutchison
damages
on
argues
the
that
Day
Dreams
contract–because
Lone
only
Wolf
actually acquired all of the leases–and that the injury is a
constitutionally insufficient threatened injury because Lone Wolf
may not enforce the contract.
In his reply brief, Hutchison summarizes the argument about
the characterization of Day Dreams’ damages:
Hutchison’s opening brief characterized the measure
of Day Dreams’ damages as “out-of-pocket leaseacquisition damages.” Day Dreams calls this “misleading
and inaccurate” because out-of-pocket damages is a
measure “geared toward a quantum merit-based claim”
rather than breach of contract.
But out-of-pocket damages (in other words, reliance
damages) is the only proper classification for the type
of damages sought by Day Dreams, and that classification
provides the context for Day Dreams’ lack of standing.
Here is why.
We learned in law school that there are two basic
measures of contract damages: (1) benefit of the bargain;
and (2) reliance. A party seeks benefit-of-the-bargain
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damages when he’d be better off if the contract were
performed; thus he seeks the benefit he expected from the
contract. A party seeks reliance (or expense) damages
when he’d be better off if the contract had never been
made; thus he seeks to recover the expenses he incurred
because of the contract.
Reply 2 (internal footnotes and citations omitted). Hutchison then
concedes that Ogden’s finder’s fee qualifies as benefit of the
bargain damages.3 Hutchison concludes that “[t]he expense damages
that Day Dreams seeks . . . are textbook reliance (or out-ofpocket) damages.” Reply 2. The argument goes that these reliance
damages
will
contract,
not
which
be
it
suffered
may
not
unless
do,
and
Lone
Wolf
therefore,
enforces
Day
its
Dreams’
threatened injury is insufficient.
A threatened or prospective injury can support standing if it
is “real, immediate, and direct.” Davis v. Fed. Election Comm’n,
554 U.S. 724, 734 (2008). “A threatened injury must be certainly
3
The Court muses whether this concession means that
Hutchison concedes that Ogden has standing to sue on the
contract. The Fifth Circuit has held that “when one of multiple
co-parties raising the same claims and issues properly has
standing, [the court] do[es] not need to verify the independent
standing of the other co-plaintiffs.” Nat’l Sold Wast Mgmt. Ass’n
v. Pine Belt Reg’l Sold Wast Mgmt. Auth., 389 F.3d 491, 501 n.18
(5th Cir. 2004). Ogden’s and Day Dreams’ claims and issues are
identical. But the Fifth Circuit has also cautioned that similar
Supreme Court precedents merely “give courts license to avoid
complex questions of standing in cases where the standing of
others makes a case justiciable, it does not follow that these
cases permit a court that knows that a party is without standing
to nonetheless allow that party to participate in the case.”
Nat’l Rifle Ass’n of Am., Inc. v. McCraw, 719 F.3d 338, 344 n.3
(5th Cir. 2013) (emphasis in original). The Court will, despite
this digression, soldier on in its analysis of Day Dreams’
standing.
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impending to constitute injury in fact.” Whitmore v. Ark., 495 U.S.
149, 158 (1990). The Supreme Court has “insisted that the injury
proceed with a high degree of immediacy, so as to reduce the
possibility of deciding a case in which no injury would have
occurred at all.” Lujan, 504 U.S. at 564 n.2. But this immediacy is
most relevant when “the plaintiff alleges only an injury at some
indefinite future time, and the acts necessary to make the injury
happen are at least partly within the plaintiff’s own control.” Id.
The imminence of an injury is “a somewhat elastic concept.” Id.
Hutchison argues that the threat of Lone Wolf’s contract
enforcement is not certain because Day Dreams “has not alleged or
even attempted to show that Lone Wolf intends or has threatened to
enforce that alleged contract. (For many reasons, people and
companies often choose not to enforce contracts.)”. Reply 4. The
Court
agrees
that
there
are
many
reasons,
both
legal
and
commercial, why a party to a contract may choose not to enforce it,
but the mere specter of nonperformance on an otherwise unchallenged
contract is insufficient to turn a contractual obligation to pay
from
a
constitutionally
sufficient
injury
into
a
speculative
injury. This is true especially at the motion to dismiss stage,
when the burden of proof for standing is at its nadir. See Lujan,
504 U.S. at 561. Thus, assuming arguendo, that the damages alleged
by Day Dreams are reliance damages, it still has alleged sufficient
injury in fact to possess itself of standing.
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Based on the foregoing analysis, the Court will deny the
motion to dismiss.
III. Order
IT IS HEREBY ORDERED THAT the Motion to Dismiss is DENIED.
SO ORDERED this the 21st day of July 2015.
/s/ David Bramlette
UNITED STATES DISTRICT JUDGE
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