Coralli et al v. JPMorgan Chase Bank NA
Filing
87
MEMORANDUM OPINION AND ORDER - It is therefore ORDERED that Defendants Motion for Summary Judgment (Dkt. 64 ) is hereby GRANTED IN PART AND DENIED IN PART.It is further ORDERED that Plaintiffs Motion for Partial Summary Judgment (Dkt. 65 ) is here by DENIED. It is further ORDERED that Plaintiffs claims are DISMISSED with prejudice as to the following: (1) conversion; (2) tortious interferencebanking; (3) violation of regulation CC; (4) defamation; and (5) negligence. Signed by Judge Amos L. Mazzant, III on 7/20/2016. (baf, )
United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
STING SOCCER OPERATIONS GROUP LP; §
ET. AL.
§
§
v.
§
§
JP MORGAN CHASE BANK, N.A.
§
CASE NO. 4:15-CV-127
Judge Mazzant
MEMORANDUM OPINION AND ORDER
Pending before the Court are Defendant’s Motion for Summary Judgment (Dkt. #64) and
Plaintiffs’ Motion for Partial Summary Judgment (Dkt. #65). Having reviewing the relevant
pleadings, the Court finds that Defendant’s Motion for Summary Judgment should be granted in
part and denied in part, and Plaintiffs’ Motion for Partial Summary Judgment should be denied.
BACKGROUND
This above-referenced case arises from Defendant JPMorgan Chase Bank, N.A.’s
(“Defendant” or “JPMC”) August 30, 2013 commencement of closure procedures on Plaintiffs’
deposit accounts. Plaintiffs were deposit account holders at JPMC in the fall of 2013 (Dkt. #64 at
p. 3). The Deposit Account Agreement (the “DAA”) included the following:
H. Closing Your Account
Either you or we may close your account (other than a CD) at any time for
any reason or for no reason. We may automatically close your account if the
account balance is $0 or negative. Any closed account may be automatically
reopened if we receive a deposit to the account. Either you or we may close your
CD account on any maturity date without cause.
We may send you written notice that we have closed or will close your
account and return the account balance less any fees, claims, setoffs, or other
amounts if the balance is greater than $1. After your account is closed, we have
no obligation to accept deposits or pay any outstanding checks. We will have no
liability for refusing to honor any check drawn on a closed account. We have the
right to advise consumer reporting agencies and other third parties reporting
agencies of accounts closed for misuse, such as kiting or overdrafts.
(Dkt. #64, Exhibit A-1 at p. 15). The DAA contained another clause, which stated:
1
3. Restricting your account
We may restrict your account if it’s involved in any legal or administrative
proceeding or if we reasonably believe that doing so is necessary to avoid a loss.
(Dkt. #64, Exhibit A-1 at p. 15).
The DAA also contained a provision regarding “Rules
governing your account,” which stated, “WE WILL NOT BE LIABLE FOR INDIRECT,
SPECIAL, OR CONSEQUENTIAL DAMAGES REGARDLESS OF THE FORM OF
ACTION AND EVEN IF WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.” (Dkt. #64, Exhibit A-1 at p. 16). The DAA included a provision on “Illegal
Activities,” which stated that “You will not use your account to conduct transactions relating to
unlawful internet gambling or any other illegal activity.
We may refuse any gambling
transaction, whether lawful or not. We may also refuse any transaction that we reasonably
believe may involve illegal or suspicious activity.” (Dkt. #64, Exhibit A-1 at p. 19).
On August 15, 2013, the United States District Attorney for the Eastern District of Texas
publicly “identified 18 individuals who conspired to illegally accept wagers on college and
professional sporting events through approximately 25 Internet websites.” (Dkt. #64 at p. 3; Dkt.
#64, Exhibit A-2).
Plaintiff Brent Coralli (“Coralli”) was among the eighteen identified
individuals (Dkt. #64 at p. 3).
Plaintiffs assert that JPMC had known of the criminal allegations against Coralli since
approximately 2010, and had already found that the Sting Plaintiffs were not involved in any
wrongdoing (Dkt. #73 at p. 3). Plaintiffs contend that JPMC closed Coralli’s personal accounts
in 2010, because of the criminal allegations against him, and JPMC investigated the Sting
Plaintiffs’ accounts, at that time, and found no problems with those accounts (Dkt. #73 at p. 3;
see Dkt. #73, Exhibit D). Additionally, Chad Tefft (“Tefft”), the JPMC relationship manager for
the Sting Plaintiffs, testified that he saw nothing that would lead him to believe that the Sting
2
Plaintiffs accounts were involved in any illegality or wrongdoing (Dkt. #73 at p. 3; Dkt. #73,
Exhibit C at 51:23-52:14).
Defendant alleges that on August 30, 2013, JPMC’s fraud hotline group received a call
from Tefft (Dkt. #64 at p. 4). Tefft had seen news reports about Coralli pleading guilty to “a
range of crimes including money laundering, illegal gambling, and tax violations.” (Dkt. #64 at
p. 4; see Dkt. #64, Exhibit A-3). Defendant asserts that Tefft expressed concern that Coralli had
transferred large sums of money from the Sting Soccer accounts to the Coralli Family Limited
Partnership account, which he used to pay off a personal real estate loan, and requested that the
fraud hotline group close Plaintiffs’ accounts (Dkt. #64 at p. 4).
Plaintiffs assert that although Craig Bogue (“Bogue”), JPMC’s corporate representative,
previously testified that the sole reason JPMC restricted the Sting Plaintiffs’ accounts was
because Tefft called the JPMC fraud hotline, JPMC has also testified that it has no idea why
Tefft allegedly called and requested the accounts’ closure (Dkt. #73 at p. 2; see Dkt. #73, Exhibit
B at 37:21-38:9; 57:2-9; 71:5-9; 246:16-247:7). Plaintiffs assert that Tefft testified that (1) he
never called the fraud hotline; (2) he could not recall anyone who had ever called the fraud
hotline; and (3) that he could not remember the fraud hotline (Dkt. #73 at p. 2; see Dkt. #73,
Exhibit C at 103:9-104:1). Plaintiffs contend that Tefft further testified that he could not
specifically remember what new article he saw concerning Coralli, and that he did not pass on
any such information to anyone within JPMC (Dkt. #73 at p. 3; see Dkt. #73, Exhibit C at 73:1674:10).
JPMC placed a restriction with intent to close on each of Plaintiffs’ accounts (Dkt. #64 at
p. 4). On August 30, 2013, JPMC sent Plaintiffs a letter informing them that “we’re closing the
account(s) and we’ve blocked access to your accounts[,]” that “[f]unds may not be withdrawn
3
from this account at this time[,]” and that “you should expect to receive the final closure
notification and a check of any remaining funds within 10 days” of JPMC verifying all deposits
and payments (Dkt. #64, Exhibit A-4).
After placing a restriction on the account, Defendant asserts that JPMC began the process
of closing Plaintiffs’ accounts and distributing the balances of the accounts to Plaintiffs (Dkt.
#64 at p. 4). Defendant asserts that the bulk of the balances were remitted to Plaintiffs by
September 24, 2013 (Dkt. #64 at p. 5). Defendant asserts that JPMC’s records reflect that all of
the balances had been remitted to Plaintiffs by October, 4, 2013 (Dkt. #64 at p. 5).
Plaintiffs assert that the funds verification process takes between sixteen and twenty-one
business days to verify deposits and return funds to their owners (Dkt. #73 at p. 4; see Dkt. #73,
Exhibit B at 52:2-18)1. Plaintiffs contend that the funds were not returned to the Plaintiffs within
that time window (Dkt. #73 at p. 4).
Plaintiffs also assert that at or around the time JPMC restricted Plaintiffs’ accounts, they
opened new accounts with Bank of America, N.A. (“Bank of America”) (Dkt. #41 at ¶ 40). In or
about December 2013, Bank of America closed some of the Plaintiffs’ accounts without
providing explanation for its actions (Dkt. #41 at ¶ 40). On November 23, 2015, Bank of
America was served with a subpoena requesting a deposition and production of documents
regarding information on the closing of Plaintiffs’ accounts and communications it had with
JPMC concerning Plaintiffs, their accounts, and any alleged wrongdoing by Plaintiffs (See Dkt.
1
The sixteen to twenty-one day period appears to be the normal length of JPMC’s account restriction. In their
motion for partial summary judgment, Plaintiffs assert the following:
Submitting a request for closure through the “fraud hotline” takes approximately one business day.
The funds verification team typically takes approximately five business days to make its review of
deposits. The account closing team then normally takes 10 to 15 business days to review the work
done by the funds verification team. So, the accounts restriction will typically last 16 to 21
business days before funds are returned to the customer. This could be 24 to 31 (or more)
calendar days.
(Dkt. #65 at p. 3).
4
#64, Exhibit B-1). On January 4, 2016, Bank of America responded, and stated that it did not
have the requested documents (Dkt. #64, Exhibit B-2).
On January 15, 2016, Plaintiffs filed their Second Amended Complaint, in which they
alleged the following claims: (1) conversion; (2) tortious interference—banking; (3) tortious
interference—customers; (4) breach of contract—improper restriction; (5) breach of contract—
privacy policy; (6) wrongful dishonor; (7) violation of Regulation CC; (8) business
disparagement; (9) defamation; and (10) negligence (Dkt. #41).
On April 1, 2016, Defendant filed its Motion for Summary Judgment (Dkt. #64). On
April 25, 2016, Plaintiffs filed their response (Dkt. #73). On May 5, 2016, Defendant filed its
reply (Dkt. #75). On May 6, 2016, Defendant filed another reply brief, in which it stated
objections to Plaintiffs’ summary judgment evidence (Dkt. #79). On May 18, 2016, Plaintiffs
filed their sur-reply (Dkt. #81).
On April 1, 2016, Plaintiffs filed their Motion for Partial Summary Judgment (Dkt. #65).
On April 25, 2016, Defendant filed its response (Dkt. #72). On May 6, 2016, Plaintiffs filed
their reply (Dkt. #78).
LEGAL STANDARD
The purpose of summary judgment is to isolate and dispose of factually unsupported
claims or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment
is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits
“[show] that there is no genuine dispute as to any material fact and that the movant is entitled to
judgment as a matter of law.” FED. R. CIV. P. 56(a). A dispute about a material fact is genuine
“if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The trial court must resolve all
5
reasonable doubts in favor of the party opposing the motion for summary judgment. Casey
Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981) (citations
omitted). The substantive law identifies which facts are material. Anderson, 477 U.S. at 248.
The party moving for summary judgment has the burden to show that there is no genuine
issue of material fact and that it is entitled to judgment as a matter of law. Id. at 247. If the
movant bears the burden of proof on a claim or defense on which it is moving for summary
judgment, it must come forward with evidence that establishes “beyond peradventure all of the
essential elements of the claim or defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th
Cir. 1986). Where the nonmovant bears the burden of proof, the movant may discharge its
burden by showing that there is an absence of evidence to support the nonmovant’s case.
Celotex, 477 U.S. at 325; Byers v. Dall. Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000).
Once the movant has carried its burden, the nonmovant must “respond to the motion for
summary judgment by setting forth particular facts indicating there is a genuine issue for trial.”
Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248-49). The nonmovant must adduce
affirmative evidence.
Anderson, 477 U.S. at 257.
No “mere denial of material facts
nor…unsworn allegations [nor] arguments and assertions in briefs or legal memoranda” will
suffice to carry this burden. Moayedi v. Compaq Comput. Corp., 98 F. App’x 335, 338 (5th Cir.
2004). Rather, the Court requires “significant probative evidence” from the nonmovant in order
to dismiss a request for summary judgment supported appropriately by the movant. United
States v. Lawrence, 276 F.3d 193, 197 (5th Cir. 2001). The Court must consider all of the
evidence, but must refrain from making any credibility determinations or weighing the evidence.
See Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).
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ANALYSIS
As preliminary matter, Defendant asserts in its reply that it objects and moves to strike
the portions of Exhibit E, the declaration of Brent Coralli, and Exhibit J, a set of notes regarding
the account closure (Dkt. #79 at pp. 1-2). Defendant argues that that Court should strike portions
of the Coralli declaration because it is conclusory, and the Court should strike Exhibit J, in its
entirety, because it is unauthenticated and constitutes impermissible hearsay (Dkt. #79 at pp. 12). Plaintiffs assert the following: (1) JPMC’s reply brief is procedurally defective2; and (2) the
evidentiary objections should be overruled (Dkt. #81 at p. 2).
Defendant asserts that portions of Exhibit E, the Coralli declaration, contain legal
conclusions and should be excluded (Dkt. #79 at p. 1). Specifically, Defendant asserts that
Coralli cannot offer testimony on causation. (Dkt. #79 at pp. 1-2).
“Under Texas law, ‘[l]ay testimony is adequate to prove causation in those cases in which
general experience and common sense will enable a layman to determine, with reasonable
probability, the causal relationship between the event and the condition.’” Hamburger v. State
Farm Mut. Auto. Ins. Co., 361 F.3d 875 (5th Cir. 2004) (quoting Morgan v. Compugraphic
Corp., 675 S.W.2d 729, 733 (Tex. 1984)). “Generally, lay testimony establishing a sequence of
events which provides a strong, logically traceable connection between the event and the
condition is sufficient proof of causation.” Id. “Therefore, in determining whether lay testimony
is sufficient to prove causation, Texas courts looks at the nature of the lay testimony and the
nature of the injury.” Id.
2
Plaintiffs object to JPMC’s multiple replies and ask that the Court strike them (Dkt. #81 at p. 2). Local Rule CV-7
states that “[e]ach pleading, motion, or response to a motion must be filed as a separate document, except for
motions for alternative relief….” The Local Rules also states that, in regards to case dispositive motions, “[a]ny
reply or sur-reply to an opposed case dispositive motion filed pursuant to Section (f) of this rule shall not exceed ten
pages, excluding attachments.” L.R. CV-7(a)(1). The Court finds that Defendant’s reply briefs do not meet the
requirements, under the Local Rules of this district. The Court will still make a determination on the merits of
Defendant’s evidentiary objections, but the parties should note of their obligation to meet the requirements of the
Local Rules in the future.
7
The Court finds that Coralli’s statements express how Defendant’s action affected his
business (See Dkt. #73, Exhibit E). Additionally, as an officer of the Sting Soccer entities,
Coralli would have knowledge as to the effect of the restriction and/or closure of the accounts on
the Sting Soccer entities. Therefore, the Court finds that Defendant’s objection should be
overruled.
Defendant also asserts that Exhibit J should be stricken, for the following reasons: (1) it
is an unauthenticated document; and (2) it contains impermissible hearsay (Dkt. #79 at pp. 2-3).
Plaintiffs assert that the document is properly authenticated, and include a declaration from
Melissa Johnson (“Johnson”), in which she stated that the notes were created by former Sting
Soccer employee Lisa McGill (“McGill”) in the course of her work for the Sting Entities (Dkt.
#81 at p. 3).
Authentication of a document is a condition precedent to its admission. See FED. R.
EVID. 901(a). “Rule 901(a) ‘merely requires some evidence which is sufficient to support a
finding that the evidence in question is what its proponent claims it to be.’” United States v.
Ceballos, 789 F.3d 607, 618 (5th Cir. 2015) (quoting United States v. Isiwele, 635 F.3d 196, 200
(5th Cir. 2011) (quoting United States v. Watkins, 591 F.3d 780, 787 (5th Cir. 2009))).
“Testimony by a witness with knowledge of the item, the item’s own distinctive characteristics,
and the circumstances of the item’s discovery may each suffice to authenticate evidence.”
Ceballos, 789 F.3d at 618-19; see United States v. Barlow, 568 F.3d 215, 220 (5th Cir. 2009); In
re McLain, 516 F.3d 301, 308 (5th Cir. 2008).
The Court finds that the document is not properly authenticated. Although Johnson’s
declaration states that the notes were created by McGill in the course and scope of her duties
while working at Sting Soccer, the Court finds that there is no evidence that the document is
8
what Plaintiffs contend it to be. Therefore, the Court finds that Defendant’s objections should be
sustained, and Exhibit J will be stricken from the summary judgment record.3
In the present case, Defendant JPMorgan Chase Bank, N.A. moves for summary
judgment the following claims: (1) conversion; (2) tortious interference—banking; (3) tortious
interference—customers; (4) breach of contract—improper restriction; (5) breach of contract—
privacy policy; (6) wrongful dishonor; (7) violation of Regulation CC; (8) business
disparagement; (9) defamation; (10) negligence; and (11) Plaintiffs’ claim for conclusory
damages (Dkt. #64). Plaintiffs move for partial summary judgment on its breach of contract—
improper restriction claim (Dkt. #65).
Conversion
Defendant moves for summary judgment on Plaintiffs’ conversion claim (Dkt. #64 at p.
7). Defendant asserts that Plaintiffs’ deposit accounts with JPMC are not different from other
ordinary deposit accounts, and are governed by the same deposit account agreement (Dkt. #64 at
pp. 8-9). Alternatively, Defendant asserts that Plaintiffs’ claim is barred by the economic loss
doctrine.4
As a preliminary matter, Defendant asserts that Plaintiffs’ conversion claim should be
dismissed under the economic loss doctrine. “Texas courts follow ‘[t]he economic loss rule
[which] generally precludes recovery in tort for economic losses resulting from a party’s failure
to perform under a contract when the harm consists only of the economic loss of a contractual
expectancy.’” Shakeri v. ADT Sec. Servs., Inc., 816 F.3d 283, 292 (5th Cir. 2016) (quoting
Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716, 718 (Tex. 2014)). Two
3
As the Court found Exhibit J should be stricken as it is unauthenticated, the Court will not address Defendant’s
argument that Exhibit J contains hearsay statements.
4
Although Plaintiffs address the economic loss doctrine for other claims, they do not address the economic loss
doctrine, as it relates to their conversion claim.
9
factors determine whether the economic loss doctrine bars a plaintiff’s tort claim: the source of
the duty and the nature of the plaintiff’s injury. Kiper v. BAC Home Loans Serv., LP, 884 F.
Supp. 2d 561, 573 (S.D. Tex. 2012), aff’d sub nom. Kiper v. BAC Home Loans Serv., L.P., 534 F.
App’x 266 (5th Cir. 2013).
The economic loss doctrine “holds that if the defendant’s conduct would give rise to
liability only because it breaches the parties’ agreement, the plaintiff’s cause of action sounds
only in contract.” Singh v. JP Morgan Chase Bank, NA, No. 4:11-CV-607, 2012 WL 3904827,
at *7 (E.D. Tex. July 31, 2012), report and recommendation adopted, No. 4:11CV607, 2012 WL
3891060 (E.D. Tex. Sept. 7, 2012) (citing Exxon Mobil Corp. v. Kinder Morgan Operating L.P.
“A,” 192 S.W.3d 120, 127 (Tex. App.—Houston [14th Dist.] 2006, no pet.)).
The mere
existence of a tort duty does not necessarily mean that a violation would result in a tort claim.
Id. (citing In re Soporex, Inc., 446 B.R. 750, 788 (N.D. Tex. 2011)). Further, “when the contract
spells out the parties’ respective rights about a subject matter, the contract, not the common law
tort theories, governs any dispute about the subject matter.” Id. (quoting Exxon Mobil Corp., 192
S.W.3d at 127). “Thus, the rule restricts contracting parties to contractual remedies for economic
losses associated with their relationship, ‘even when the breaching might be reasonably viewed
as a consequence of a contracting party’s negligence.’” McDaniel v. JPMorgan Chase Bank,
N.A., No. 1:12-CV-392, 2012 WL 6114944, at *7 (E.D. Tex. Dec. 10, 2012) (quoting Lamar
Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 13 (Tex. 2007)).
However, it does not bar all tort claims arising out of a contractual setting. In Chapman
Custom Homes, Inc., the Supreme Court of Texas stated that “a party [cannot] avoid tort liability
to the world simply by entering into a contract with one party [otherwise the] economic loss rule
[would] swallow all claims between contractual and commercial strangers.” 445 S.W.3d at 718
10
(quoting Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 419 (Tex. 2011)).
Therefore, “a party states a tort claim when the duty allegedly breached is independent of the
contractual undertaking and the harm suffered is not merely the economic loss of a contractual
benefit.” Id.; see LAN/STV v. Martin K. Eby Constr. Co., 435 S.W.3d 234, 242-43 (Tex. 2014).
After reviewing the relevant pleadings, the Court finds that the economic loss doctrine
does apply to Plaintiffs’ conversion action. Plaintiffs assert that “Defendant converted funds in
Plaintiffs’ accounts that were held for the benefit of third parties by withholding them without
justification and/or for an unreasonable time.” (Dkt. #41 at ¶ 34). Additionally, Plaintiffs assert
that “Defendant placed an essentially indefinite restriction on the member teams’ funds without
any explanation and/or justification.” (Dkt. #41 at ¶ 34).
The Court finds that Plaintiffs’ conversion claim does rise out of the DAA signed
between Plaintiffs and JPMC. Additionally, Plaintiffs do not allege an independent injury, apart
from the injury incurred by JPMC’s alleged breach of the DAA. The Court finds that, based
upon the evidence, Plaintiffs’ conversion claim would give rise to the liability only because it
breaches the DAA between JPMC and Plaintiffs, and as such, it is barred by the economic loss
doctrine. See Singh, 2012 WL 3904827, at *7. Therefore, the Court finds that Defendant’s
motion for summary judgment should be granted as to Plaintiffs’ conversion claim.5
Tortious Interference—Banking
Defendant also asserts that the Court should grant summary judgment as to Plaintiffs’
claim under tortious interference with prospective banking business relationships (See Dkt. #64
at pp. 10-11). Specifically, Defendant asserts the following: (1) Plaintiffs’ claims are barred by
the applicable one-year statute of limitations period; (2) Plaintiffs have no evidence of any
5
Defendant also asserts that no cause of action exists for Plaintiffs’ claim of conversion as the deposit accounts were
governed by the DAA. As the Court found that the claim is barred by the economic loss doctrine, it will not address
Defendant’s other claim.
11
communication between JPMC and Bank of America relating to Coralli’s criminal activity (Dkt.
#64 at pp. 10-11). In their response, Plaintiffs do not address this claim (See Dkt. #73).
It appears from Defendant’s Motion for Summary Judgment and Plaintiffs’ Second
Amended Complaint that Defendant is requesting that the Court dismiss both Plaintiffs’ claim
for tortious interference with an existing contract and tortious interference with prospective
business relationship.6 Therefore, the Court will address those arguments below.
From the outset, Defendant argues that Plaintiffs’ claims for tortious interference should
be dismissed because they are barred by the applicable one-year statute of limitations period
(Dkt. #64 at p. 10). “A two-year statute of limitations [period] typically applies to [tortious
interference] causes of action. However when allegedly defamatory statements form the sole
basis for plaintiff’s tortious interference claim, defamation’s one-year statute of limitations
applies.” Nationwide Bi-Weekly Admin, Inc. v. Belo Corp., 512 F.3d 137, 146 (5th Cir. 2007)
(citation omitted); see Martinez v. Hardy, 864 S.W.2d 767, 776 (Tex. App.—Houston [14th
Dist.] 1993, no writ). Plaintiffs assert that JPMC provided Bank of America “with false and/or
defamatory information that induced Bank of America to end its relationship with Plaintiffs.”
(Dkt. #41 at ¶ 41). Plaintiffs assert that the closure took place, in or about December 2013 (Dkt.
#41 at ¶ 40). However, Plaintiffs filed the present case in state court on January 20, 2015, more
than a year after the alleged statements took place. Therefore, the Court finds that Defendant’s
motion for summary judgment regarding Plaintiffs’ claim for tortious interference with the Bank
of America contract is granted.7
6
In its motion for summary judgment, Defendant only cites to the tortious interference with prospective business
relationship standard; however, the Court finds that Defendant’s arguments also go to Plaintiffs’ tortious
interference with an existing contract claims as well.
7
In its motion for summary judgment, Defendant only contends that Plaintiffs’ claim against Defendant regarding
the Bank of America contract is time-barred. Therefore, the Court will address the merits of Plaintiffs’ claim of
tortious interference with prospective business relationship with the other banking entities. Additionally, as the
12
“Texas law protects existing and prospective contracts from interference.” Stewart Glass
& Mirror, Inc. v. U.S. Auto Glass Discount Centers, Inc., 200 F.3d 307, 316 (5th Cir. 2000)
(quoting Juliette Fowler Homes, Inc. v. Welch Assocs., Inc., 793 S.W.2d 660, 665 (Tex. 1990)).
Under Texas law, “[t]o establish a claim for tortious inference with prospective business
relations, a plaintiff must prove that: (1) there was a reasonable probability that the parties
would have entered into a contractual relationship; (2) the defendant committed an
‘independently tortious or unlawful act’ that prevent the relationship from occurring; (3) the
defendant committed the act with a conscious desire to prevent the relationship from occurring or
knew that the interference was certain or substantially certain to occur as a result of his conduct;
and (4) the plaintiff suffered actual harm or damage as a result of the defendant’s interference—
that is, that the defendant’s actions prevented the relationship from occurring.” Alliantgroup,
L.P. v. Feingold, 803 F. Supp. 2d 610, 628 (S.D. Tex. 2011) (citing Faucette v. Chantos, 322
S.W.3d 901, 913-14 (Tex. App.—Houston [14th Dist.] 2010, no pet. h.)); see also Wal-Mart
Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001); Martin v. Kroger Co., 65 F. Supp. 2d
516, 563 (S.D. Tex. 1999).
Additionally, in a tortious interference with a prospective business relationship claim,
“[t]he plaintiff must show that the defendant’s conduct was either independently tortious or
unlawful, that is, that the conduct violated some other recognized tort duty.” Alliantgroup, L.P.,
803 F. Supp. 2d at 628; see Sturges, 52 S.W.3d at 726; Astoria Indus. Of Iowa, Inc. v. SNF, Inc.,
223 S.W.3d 616, 632 (Tex. App.—Fort Worth 2007, pet. denied).
The “prevented the relationship from occurring” element requires “at minimum,
that the tortious conduct constitutes a cause in fact that prevented the prospective
business relationship from coming to fruition in the form of a contractual
agreement. The test for cause in fact, or ‘but for causation,’ is whether the act or
Court finds that Plaintiffs’ claim is barred by the statute of limitations, it will not discuss Defendant’s claim as to
whether evidence exists regarding Plaintiffs’ claim for tortious interference with an existing contract.
13
omission was a substantial factor in causing the injury ‘without which the harm
would not have occurred.’”
Id. at 628-29 (quoting COC Servs., Ltd. v. CompUSA, Inc., 150 S.W.3d 654, 679 (Tex. App.—
Dallas 2004, pet. denied) (quoting Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472,
477 (Tex. 1995))). “A plaintiff seeking to recover for tortious interference with prospective
business relationships must establish proximate causation and damages with evidence rising
above mere suspicion or speculation.” Id. at 629; see B. Cantrell Oil Co. v. Hino Gas Sales, Inc.,
756 S.W.2d 781, 784 (Tex. App.—Corpus Christi 1988, no writ), superseded by statute on other
grounds.
In their Second Amended Complaint, Plaintiffs allege that “[they] have since approached
other banks concerning opening new accounts. In at least one occasion, a bank has been
prepared to open numerous accounts for the Plaintiffs but has cancelled the opening at the last
minute.” (Dkt. #41 at ¶ 42). However, there is no evidence in the present case demonstrating
that any interference by Defendant exists. In fact, when Mutual of Omaha Bank (“Mutual of
Omaha”) was subpoenaed to testify and produce documents at a deposition the present case, it
sent a letter to Plaintiffs’ counsel stating that “[a]fter a thorough search of our records, [Mutual
of Omaha was] unable to find any documents responsive to [the] Subpoena request regarding the
above-mentioned case.” (Dkt. #64, Exhibit B-4). There is no evidence that JPMC made any
allegedly defamatory statement to a third-party bank, and that JPMC acted to prevent any
relationship between Plaintiffs and a third-party bank from occurring. Therefore, the Court finds
that Defendant’s motion for summary judgment should be granted as to Plaintiffs’ claim for
tortious interference with a prospective business relationship, as it relates to the third-party
banks.
14
Tortious Interference—Customers
Defendant also claims that summary judgment is appropriate as to Plaintiffs’ claim for
tortious interference with an existing contract, as it relates to the contracts between Plaintiffs and
Plaintiffs’ customers (Dkt. #64 at p. 12). “To maintain a cause of action for tortious interference
with an existing contract, a plaintiff must demonstrate ‘(1) the existence of a contract subject to
interference, (2) the act of interference was willful and intentional, (3) such intentional act was a
proximate cause of plaintiff’s damage and (4) actual damage or loss occurred.’” Stewart Glass,
200 F.3d at 316 (quoting Johnson v. Hosp. Corp. of Am., 95 F.3d 383, 394 (5th Cir. 1996) (citing
Victoria Bank & Tr. Co. v. Brady, 811 S.W.2d 931, 939 (Tex. 1991))); see Butnaru v. Ford
Motor Co., 84 S.W.3d 198, 207 (Tex. 2002).
First, Defendant asserts that Plaintiffs’ claims are barred by the applicable one-year
statute of limitations (Dkt. #75 at pp. 5-6).
“A two-year statute of limitations [period] typically
applies to [tortious interference] causes of action.” Nationwide Bi-Weekly Admin, Inc., 512 F.3d
at 146; see Martinez v. Hardy, 864 S.W.2d 767, 776 (Tex. App.—Houston [14th Dist.] 1993, no
writ). Unlike Plaintiffs’ tortious interference claim against the third-party banking entities, it
does not appear that Plaintiffs’ are asserting defamation claims for their tortious interference
with the existing contracts that the Sting Entities had with their customers (See Dkt. #41).
Therefore, a two-year statute of limitations period would be applicable to the present claim. As
Plaintiffs filed the present action in state court on January 21, 2015, the Court finds that
Plaintiffs’ claim is not barred by the statute of limitations.
Additionally, Defendant asserts that Plaintiffs’ claim is barred by the economic loss
doctrine (Dkt. #64 at p. 12). After reviewing the relevant pleadings, the Court finds that
15
Plaintiffs’ tortious interference with an existing contract claim arises separate and apart from its
breach of contract claim against JPMC. Plaintiffs assert the following:
Defendant knew of the relationship between the Plaintiff and its customers with
respect to the bank accounts held with Defendant. The Defendant knew that
interference with such relationships was certain or substantially certain to occur as
a result of its conduct in restricting the accounts.
(Dkt. #41 at ¶ 52). Although the action is derived from JPMC’s decision to restrict Plaintiffs’
accounts, Plaintiffs’ tortious interference claim alleges an independent duty breached separately
from its contractual undertaking, and the harm Plaintiffs allegedly suffered is not merely the
economic loss of a contractual benefit. See Chapman Custom Homes, Inc., 445 S.W.3d at 718;
see LAN/STV, 435 S.W.3d at 242-43.
Therefore, the Court finds that Plaintiffs’ tortious
interference claim, with respect to the contracts between the Sting Entities and their customers, is
not barred by the economic loss doctrine.
Defendant also asserts that the claim fails because Plaintiffs have no evidence of (1) any
contract between the Sting Entities and their customers; or (2) any willful or intentional
interference by JPMC with that contract (Dkt. #64 at p. 12). Plaintiffs assert that all of the Sting
Entity members sign yearly contracts with Plaintiffs (Dkt. #73 at pp. 11-12). Plaintiffs also
contend that “the evidence…shows that JPMC believed that the damage to Plaintiffs’ business
was substantially certain to result from the unannounced restriction on all accounts.” (Dkt. #73 at
p. 12).
The evidence demonstrates that the member teams signed yearly contracts with the Sting
Plaintiffs (Dkt. #73, Exhibit E). The teams that had funds that were affected by JPMC’s alleged
actions had contracts with the Sting Entities (Dkt. #73, Exhibit E). Additionally, the evidence
shows that Tefft, at a minimum, was aware that funds in many of the Sting Plaintiffs’ bank
accounts were held for the benefit of the member teams and belonged to the member teams (Dkt.
16
#73, Exhibit C at 34:15-36:15). Tefft also knew that the funds were used for the teams’ expenses
and travel (Dkt. #73, Exhibit C at 38:6-25). Additionally, JPMC was aware that restricting
accounts could harm customer relationships. On September 1, 2013, Coralli wrote to JPMC and
stated:
We are a large soccer organization and have over 100 accounts that are used by
my administration and each individual team. These accounts represent over 5,000
individuals, 2500 families that are impacted by this action. We have teams
travelling all over the country on this holiday weekend playing in tournaments
that cannot access their funds by using their debit cards for hotel check-ins, autos,
and meals. We have a lot of upset people and this has done [] tremendous
damage to my business and the faith of the members of my Organization in the
Sting Organization itself.
(Dkt. #73, Exhibit G). The Court finds that Defendant has not met its burden of demonstrating
that no genuine issue of material fact exists; and therefore, the Court finds that its motion for
summary judgment should be denied as to Plaintiffs’ tortious interference with an existing
contract claim.
Breach of Contract—Improper Restriction
Defendant also claims that Plaintiffs’ claim for breach of contract, based upon the
restriction of the accounts, should be dismissed as Plaintiffs have not identified a contract
provision that JPMC breached (Dkt. #64 at p. 13). Plaintiffs also claim that the Court should
grant summary judgment on this claim; however, in their motion for partial summary judgment,
they assert that summary judgment is warranted because Defendant cannot demonstrate that its
restriction of Plaintiffs’ accounts was justified (Dkt. #65 at p. 5).
“To prevail on a breach of contract claim, a party must establish the following elements:
(1) a valid contract existed between the plaintiff and the defendant; (2) the plaintiff tendered
performance or was excused from doing so; (3) the defendant breached the terms of the contract;
and (4) the plaintiff sustained damages as a result of the defendant’s breach.” West v. Triple B
17
Servs., LLP, 264 S.W.3d 440, 446 (Tex. App.—Houston [14th Dist.] 2008, no pet.); see Marquis
Acquisitions, Inc. v. Steadfast Ins. Co., 409 S.W.3d 808 (Tex. App.—Dallas 2013, no pet.).
After reviewing the relevant pleadings, the Court finds that neither Plaintiffs nor
Defendant have met their burdens in demonstrating that there is no material issue of fact on this
claim. The DAA stated that,
H. Closing Your Account
Either you or we may close your account (other than a CD) at any time for
any reason or for no reason. We may automatically close your account if the
account balance is $0 or negative. Any closed account may be automatically
reopened if we receive a deposit to the account. Either you or we may close your
CD account on any maturity date without cause.
We may send you written notice that we have closed or will close your
account and return the account balance less any fees, claims, setoffs, or other
amounts if the balance is greater than $1. After your account is closed, we have
no obligation to accept deposits or pay any outstanding checks. We will have no
liability for refusing to honor any check drawn on a closed account. We have the
right to advise consumer reporting agencies and other third parties reporting
agencies of accounts closed for misuse, such as kiting or overdrafts.
(Dkt. #64, Exhibit A-1 at p. 15). It also included a provision, which stated,
3. Restricting your account
We may restrict your account if it’s involved in any legal or administrative
proceeding or if we reasonably believe that doing so is necessary to avoid a loss.
(Dkt. #64, Exhibit A-1 at p. 15). A question of fact remains as to whether JPMC had a reason to
think the account was involved in a legal proceeding that would require it to restrict Plaintiffs’
accounts. Therefore, the Court finds that Defendant’s motion for summary judgment should be
denied as to Plaintiffs’ breach of contract claim that is based upon the restriction of the accounts,
and Plaintiffs’ motion for partial summary judgment should be denied.
Breach of Contract—Privacy Policy
Defendant also claims that Plaintiffs’ claim for breach of the privacy policy should be
dismissed as there is no evidence that any statement was made by JPMC (Dkt. #64 at p. 14).
18
Plaintiffs assert that the JPMC privacy notice provided for only a limited sharing of information
by JPMC (Dkt. #73 at p. 14). Plaintiffs assert that JPMC shared significantly more information
than the privacy policy permitted (Dkt. #73 at p. 14). Specifically, they assert that JPMC
informed Kermit Swaner (“Swaner”) that funds would not be released from the accounts due to
the Sting Plaintiffs’ involvement in a “legal action.” (Dkt. #73 at pp. 14-15).8 Defendant asserts
that Swaner was “a team manager with account access….”
(Dkt. #75 at p. 6 n. 17).
Additionally, evidence presented by Defendant demonstrates that Swaner is listed as a signer on
the account (Dkt. #75, Exhibit B-1). The Court finds that a question of fact exists as to whether
JPMC breached its privacy policy; and therefore, Defendant’s summary judgment as to their
breach of contract claim regarding the privacy policy is denied.
Wrongful Dishonor
Defendant also asserts that summary judgment should be granted as to Plaintiffs’
wrongful dishonor claim (Dkt. #64 at p. 15).
Section 4.402 of the Texas Business and Commerce Code concerns a bank customer’s
right to recover for wrongful dishonor of checks, and provides:
A payor bank is liable to its customer for damages proximately caused by the
wrongful dishonor of an item. Liability is limited to actual damages proved and
may include damages for arrest or prosecution of the customer or other
consequential damages. Whether any consequential damages are proximately
caused by the wrongful dishonor is a question of fact to be determined in each
case.
Defendant claims that summary judgment is appropriate for the following reasons: (1) JPMC
placed a restriction on the account because it believed it could be involved in Coralli’s illegal
sports gambling activities; (2) Plaintiffs have not identified any transactions that were wrongfully
dishonored; and (3) Plaintiffs have not identified any damages that they incurred (Dkt. #64 at p.
8
Plaintiffs’ also cited an instance between JPMC and Diana Decannini. However, the instance was reference in
Exhibit J, which was stricken by the Court, and therefore, the Court will not consider this evidence.
19
16). After reviewing the relevant evidence, the Court finds that a question of fact exists, and
Defendant has not met their burden in demonstrating that no material fact exists as to Plaintiffs’
wrongful dishonor claim. Plaintiffs’ wrongful dishonor claim should proceed to trial. Therefore,
the Court finds that Defendant’s motion for summary judgment should be denied as this claim.
Violation of Regulation CC
Defendant also asserts that Plaintiffs’ claims that JPMC violated Regulation CC should
be dismissed because (1) their claim is barred by the one-year statute of limitations period; and
(2) JPMC did not fail to make a specific deposit available as is required for a claim under
Regulation CC (Dkt. #64 at pp. 18-19). Title 12 Code of Federal Regulations section 229.21(d)
states, “[a]ny action under this section may be brought in any United States district court or in
any other court of competent jurisdiction, and shall be brought within one year after the date of
the occurrence of the violation involved.” (emphasis added). In the present case, JPMC fully
closed Plaintiffs’ accounts and returned their funds by October 4, 2013 (Dkt. #64 at p. 19).
Plaintiffs filed the present action in state court on January 20, 2015 (Dkt. #64 at p. 19). The
Court finds that Plaintiffs’ claim of violation of Regulation CC is time-barred, as it was filed
more than one-year after the occurrence of the alleged violation took place.
Therefore,
Defendant’s motion for summary judgment as the violation of Regulation CC is granted.9
Business Disparagement
Defendant also asserts that Plaintiffs’ business disparagement claim is barred by the
applicable one-year statute of limitations period (Dkt. #64 at p. 19). Additionally, Defendant
asserts that Plaintiffs have no evidence of any communication between JPMC and any other bank
or customer relating to them or Coralli’s criminal activity (Dkt. #64 at p. 20).
9
As the Court granted summary judgment as to Defendant’s argument that Plaintiffs’ claim is barred by the
applicable statute of limitations period, it will not address Defendant’s other claims.
20
First, Defendant asserts that Plaintiffs’ business disparagement claim is barred by a oneyear statute of limitations period (Dkt. #64 at p. 19).
Plaintiffs assert that their business
disparagement claim is not barred because the applicable statute of limitation is a two-year time
period (Dkt. #73 at p. 19).
“To prevail on a business disparagement claim, a plaintiff must establish that (1) the
defendant published false and disparaging information about it, (2) with malice, (3) without
privilege, (4) the resulted in special damages to the plaintiff.”
Forbes, Inc. v. Grenada
Biosciences, Inc., 124 S.W.3d 167, 170 (Tex. 2003) (citing Hurlbut v. Gulf Atl. Life Ins. Co., 749
S.W.2d 762, 766 (Tex. 1987)).
A business disparagement claim is similar in many respects to a defamation
action. The two torts differ in that defamation actions chiefly serve to protect the
personal reputation of an injured party, while a business disparagement claim
protects economic interests. In Hurlbut, a suit brought by an insurance agent
against his former employer, we noted that a business disparagement defendant
may be held liable “only if he knew of the falsity or acted with reckless disregard
concerning it, or if he acted with ill will or intended to interfere in the economic
interest of the plaintiff in an unprivileged fashion.”
Id.
“Business disparagement actions are governed by a two-year limitations period when the
injury alleged is direct pecuniary loss rather than a personal loss in reputation.” Marquis v.
OmniGuide, Inc., No. 3:09-CV-2092-D, 2011 WL 321112, at *5 (N.D. Tex. Jan. 28, 2011); see
Hurlbut, 749 S.W.2d 762, 767 (Tex. 1987) (treating business disparagement action as slander
action governed by one-year statute of limitations because of lack of pecuniary loss); Newsom v.
Brod, 89 S.W.3d 732, 734 (Tex. App.—Houston [1st Dist.] 2002, no pet.) (acknowledging that
business disparagement has two-year statute of limitations, but upholding application of one-year
statute of limitations where injuries were primarily personal rather than relating to inference of
commercial or economic relations).
21
“To determine the applicable limitations period, the court must decide whether the
gravamen of the damages alleged in Plaintiffs’ claim is personal or pecuniary.” Marquis, 2011
WL 321112, at *5; see Hurlbut, 749 S.W.2d at 767-77 (noting that slander and business
disparagement protect different interests, and requiring evidence of damage to economic interests
for claim to be evaluated as business disparagement claim). “Several Texas courts, and the Fifth
Circuit, have applied Hurlbut to treat business disparagement actions as defamation claims
where the gravamen was defamatory injury to the plaintiff’s reputation and there was no
evidence of pecuniary loss.” Marquis, 2011 WL 321112, at *5; see, e.g., Nationwide Bi-Weekly
Admin., Inc. v. Belo Corp., 512 F.3d 137, 146-47 (5th Cir. 2007) (applying Hurlbut to dismiss
under Rule 12(b)(6) where plaintiff failed to allege any specific economic loss and “failed to
provide any meaningful basis upon which to distinguish [business disparagement] claim from the
defamation claim”); Williamson v. New Times, Inc., 980 S.W.2d 706, 710 (Tex. App.—Fort
Worth 1998, no pet.) (applying one-year statute of limitations where damages alleged were
primarily personal and general, such as “injury to personal reputation, humiliation, or mental
anguish,” even though incidental or consequential professional losses were also pleaded and
proved.). Therefore, “[a] plaintiff seeking damages for business disparagement must prove
special damages resulting from the harm. If the damages alleged are primarily personal and
general—e.g., injury to personal reputation, humiliation, or mental anguish—then the cause of
action is one for libel or slander, although incidental or consequential professional losses also are
pleaded and proved.” Mayfield v. Fullhart, 444 S.W.3d 222, 230-231 (Tex. App.—Houston
[14th Dist.] 2014, pet. denied).
In the present case, Plaintiffs allege that various statements were made during the account
restriction and closure process—which occurred between August 30, 2013, and October 4, 2013
22
(Dkt. #41 at ¶ 83). Plaintiffs contend that Defendant’s statements harmed their business through
lost revenue, lost profits, lost business opportunities, damage to the Plaintiffs’ good will and
reputation, and expense incurred in securing alternative banking relationships (Dkt. #41 at ¶ 85).
The Court finds that the two-year statute of limitations applies in the present case.
Plaintiffs pleaded pecuniary business losses in their Second Amended Complaint, not personal
and general damages (Dkt. #41 at ¶ 85). As the two-year statute of limitations applies, the Court
finds that Plaintiffs filed suit within that two year period, and thus, the statute of limitations does
not bar their claim.
Defendant also asserts that Plaintiffs have no evidence of any communication between
JPMC and any other bank or customer relating to them or Coralli’s criminal activity (Dkt. #64 at
p. 20). Upon review of the summary judgment evidence, the Court finds that Defendant has not
met its burden of demonstrating that no material question of facts exists; and therefore,
Defendant’s motion for summary judgment as to Plaintiffs’ business disparagement claim is
denied.
Defamation
Defendant also asserts that summary judgment should be granted as to Plaintiffs’
defamation claim for the following reasons: (1) the claims are barred under the one-year statute
of limitations; (2) there is no evidence of any false and defamatory statement, or any malice, on
JPMC’s regarding the truth the of the statement; and (3) there is no evidence of any damages
suffered by Plaintiffs (Dkt. #64 at p. 21). Plaintiffs do not address the statute of limitations
argument.10
10
Plaintiffs state that they incorporate by reference the arguments made elsewhere in their response for purposes of
their defamation claim (Dkt. #73 at p 20). However, the statute of limitations in regards to Plaintiffs’ defamation
claim is separate and apart from the other claims arguments. As such, the Court finds that Plaintiffs have not
addressed this argument.
23
“A one-year statute of limitations applies to an action for defamation.” San Antonio
Credit Union v. O’Connor, 115 S.W.3d 82, 96 (Tex. App.—San Antonio 2003, no pet.) (citing
Tex. Civ. Prac. & Rem. Code § 16.002(a)). “An action for defamation accrues when the
defamatory statement is published.” Id., see Kelley v. Rinkle, 532 S.W.2d 947, 949 (Tex. 1976)
(holding “that the period of limitations for causes of action for libel of one’s credit reputation by
publication of defamatory report to a credit agency begins to runs when the person defamed
learns of, or should by reasonable diligence have learned of, the existence of the credit report”).
The Court finds that Plaintiffs’ defamation claim is barred by the one-year statute of
limitations. Plaintiffs asserts that “Defendant has published false information concerning the
Plaintiffs and their business practices to the Plaintiffs’ then existing customers.” (Dkt. #41 at ¶
87). On September 18, 2013, JPMC told Swaner that the funds could not be released due to a
legal action (Dkt. #73, Exhibit I). Plaintiffs also assert that “Defendant has published false
statements to other banking institutions concerning the Plaintiffs that have caused those banks to
end or not enter into banking relationships with Plaintiffs.” (Dkt. #41 at ¶ 88). Plaintiffs assert
that the closure of their Bank of America account took place, in or about December 2013 (Dkt.
#41 at ¶ 40). However, Plaintiffs filed the present case in state court on January 20, 2015, more
than a year after the alleged defamatory statements took place, which is over one year after both
incidents took place. Therefore, the Court finds that Defendant’s motion for summary judgment
Plaintiffs’ claim for defamation should be granted.11
11
As the Court granted summary judgment as to Defendant’s statute of limitations argument, it will not address
Defendant’s other claims.
24
Negligence
Defendant asserts that the Court should grant summary judgment as to Plaintiffs’
negligence claim because the claim is barred under the economic loss doctrine (Dkt. #64 at p.
22).
“The elements of a negligence claim are: (1) a legal duty owed by one person to another;
(2) breach of that duty; and (3) damages proximately caused by the breach.” Johnson v. Wells
Fargo Bank, N.A., 999 F. Supp. 2d 919, 930 (N.D. Tex. 2014); see Lane v. Halliburton, 529 F.3d
548, 565 (5th Cir. 2008); Nabors Drilling USA, Inc. v. Escoto, 288 S.W.3d 401, 404 (Tex. 2009).
As previously stated, “the economic loss rule ‘generally precludes recovery in tort for economic
loss resulting from the failure of a party to perform under a contract.’” Johnson, 999 F. Supp. 2d
at 930 (quoting Lamar Homes, Inc., 242 S.W.3d at 12). Therefore, “tort damages are generally
not recoverable if the defendant’s conduct ‘would give rise to liability only because it breaches
the parties’ agreement.’” Id. (quoting Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex.
1991)).
The Court finds that Plaintiffs’ negligence claim is barred by the economic loss doctrine.
Plaintiffs do not allege an injury independent from the subject matter of the contract (See Dkt.
#41 at ¶ 102). Plaintiffs allege that “[t]he negligence claim…relies upon [the] un-waivable
duties [of good faith and ordinary care].” (Dkt. #73 at p. 21). However, the Court finds that
these duties also relate to Plaintiffs’ contractual claims, and do not create independent causes of
action, to which Defendant is liable. Therefore, the Court finds that Plaintiffs’ negligence claim
is barred by the economic loss doctrine, and Defendant’s motion for summary judgment as to
that claim is granted.
25
Waiver of Consequential Damages
Defendant also asserts that “[i]n the alternative…, the Court should enter summary
judgment on all of Plaintiffs’ claim because the only damages Plaintiffs seek are consequential
damages that have been contractually waived.” (Dkt. #64 at p. 22). Plaintiffs assert that
damages are not waived because the damages waiver is unenforceable (Dkt. #73 at p. 21).
The DAA contains a provision, which states as follows:
WE [JPMC] WILL NOT BE LIABLE FOR INDIRECT, SPECIAL, OR
CONSEQUENTIAL DAMAGES REGARDLESS OF THE FORM OF
ACTION AND EVEN IF WE HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
(Dkt. #64, Exhibit A-1). First, Plaintiffs assert that the waiver is void because it is against Texas
public policy (Dkt. #73 at p. 21). Specifically, Plaintiffs assert the following:
Texas Business and Commerce Code Chapter 4 governs Bank Deposits and
Collections. The Texas Business and Commerce Code allows banks to vary
certain provisions of state law by agreement, but absolutely prohibits any attempt
to limit liability or damages for a bank’s lack of good faith or failure to exercise
ordinary care.
(Dkt. #73 at pp. 21-22) (citing Tex. Bus. & Comm. Code § 4.103(a)).
“The Texas Constitution protects the freedom to contract, and the Texas Supreme Court
has long recognized a strong public policy in favor of preserving the freedom of contract.”
Interstate 35/Chisam Road, L.P. v. Moayedi, 377 S.W.3d 791, 797 (Tex. App.—Dallas 2012),
aff’d, 438 S.W.3d 1 (Tex. 2014); see Tex. Const. art. I, § 16; Fairfield Ins. Co. v. Stephens
Martin Paving, L.P., 246 S.W.3d 653, 664 (Tex. 2008). “Absent a statute or fundamental public
policy precluding waiver, a party may contractually waive even constitutional or statutory rights,
whether present or future.” Moayedi, 377 S.W.3d at 797 (citing Wright v. Sport Supply Grp.,
Inc., 137 S.W.3d 289, 294 (Tex. App.—Beaumont 2004, no pet.)). “In examining an agreement
to determine if it is contrary to public policy, a court looks to whether the agreement has a
26
tendency to injure the public good and considers the development and policies underlying any
applicable statutes.” Id.; see Fairfield, 246 S.W.3d at 666; Johnson v. Structured Asset Serv.,
LLC, 148 S.W.3d 711, 726-27 (Tex. App.—Dallas 2004, no pet.). “Unless the agreement
contravenes some positive statute or some well-established rule of law, a court should refrain
from characterizing the agreement as unenforceable and void as against public policy.”
Moayedi, 377 S.W.3d at 797 (citing Lawrence v. CDB Servs., Inc., 44 S.W.3d 544, 553 (Tex.
2001), superseded on other grounds by Tex. Lab. Code § 406.003(e) (quoting Sherrill v. Union
Lumber Co., 207 S.W. 149, 153-54 (Tex. App.—Beaumont 1918, no writ))).
The Court agrees with Plaintiffs. Although the Texas Business and Commerce Code
allows parties to vary the agreement, it expressly states that “the parties to the agreement cannot
disclaim a bank’s responsibility for its lack of good faith or failure to exercise ordinary or limit
the measure of damages for the lack of failure.” Tex. Bus. & Comm. Code § 4.103(a) (emphasis
added). The Court finds that the waiver provision in the DAA attempts to waive the damages
that JPMC could incur, and thus, could violate Texas public policy if the bank is disclaiming
responsibility for its own lack of good faith. See Am. Airlines Emp. Fed. Credit Union v. Martin,
29 S.W.3d 86, 95 (Tex. 2000) (“Section 4.103(a) permits parties to vary the effect of Article 4’s
provisions by agreement, as long as that agreement does not ‘disclaim a bank’s responsibility for
its own lack of good faith or failure to exercise ordinary care,’ or ‘limit the measure of damages
for such lack of failure.’”).12 Therefore, the Court finds that Defendant’s motion for summary
judgment as to the waiver of consequential damages is denied.
12
Plaintiffs also assert that the damages waiver is void because it is unconscionable (Dkt. #73 at p. 23). The Court
disagrees. Assuming arguendo that the agreement constituted a contract of adhesion, the Texas Supreme Court has
held that “adhesion contracts are not per se unconscionable or void.” In re Palm Harbor Homes, Inc., 195 S.W.3d
672, 678 (Tex. 2006); In re AdvancePCS Health L.P., 172 S.W.3d 603, 608 (Tex. 2005) (per curiam). Additionally,
Plaintiffs have not presented additional evidence to the Court that would lead it to believe that procedural and
substantive unconscionability exist. See Am. Stone Diamond, Inc. v. Lloyds of London, 934 F. Supp. 839, 844 (S.D.
Tex. 1996).
27
CONCLUSION
It is therefore ORDERED that Defendant’s Motion for Summary Judgment (Dkt. #64) is
hereby GRANTED IN PART AND DENIED IN PART.
It is further ORDERED that Plaintiffs’ Motion for Partial Summary Judgment (Dkt. #65)
.
is hereby DENIED.
It is further ORDERED that Plaintiffs’ claims are DISMISSED with prejudice as to the
following: (1) conversion; (2) tortious interference—banking; (3) violation of regulation CC; (4)
defamation; and (5) negligence.
SIGNED this 20th day of July, 2016.
___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
28
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